Prime Minister Christopher Luxon says the move on interest deductibility announced over the weekend may have been a compromise on what the National-Act coalition agreement had set out, but that was a compromise to reflect the current fiscal situation.

He said that was a mark of a “grown-up government”.

Luxon made the comments at his weekly post-Cabinet press conference.

“We’ve phased it and delivered it in a slightly different way, but that wasn’t a biggie for either of the two parties,” Luxon said.

He said the aim was to ease costs on landlords to try to increase the availability of rental properties.

Asked if there was an issue with applying a retrospective tax break to landlords, he said they had simply concluded it was the best way to move on the policy.

“We are a dynamic government, looking at the situation we are in.”

He said both parties wanted to restore interest deductibility and had to work out the best way to do that.

Luxon wouldn’t promise rents would drop but said rents had risen a lot under the previous government because of extra costs loaded onto landlords. Asked if he would drop the rent on his rental properties, he said it was a matter of his personal finances and would not answer.

Asked what his Government had done so far to ease the cost of living crisis for people, he said it had changed the Reserve Bank mandate and scrapped the Auckland regional fuel tax, as well as halting other fuel taxes for the rest of the term.

“I spoke to you guys two years about the risk of rising inflation. We are trying to deal with the cause of that by getting inflation back under control.”

Priority: International connections and trade

Luxon said a priority for the Government over the term will be building international connections and trade, pointing to his visit to Australia last week to meet leaders of ASEAN countries - a key market - and Foreign Minister Winston Peters’ trip to India this week.

He said he intended to build on his relationships with those leaders. He also met with Vietnam’s Prime Minister Pham Minh Chinh in Wellington this morning to discuss building trade between the two countries.

Luxon will entertain Chinh over dinner tonight.

Luxon said he wanted to focus New Zealand’s attention on the Indo-Pacific region and intended to take a big trade delegation to India himself toward the end of the year.

Speaking on David Seymour’s review of the food in schools programme, Luxon said the previous government had not put in place funding to continue it after next year. He was committed to continuing with it, but was keen to look at whether there were better ways to deliver it.

“The effectiveness of the programme is important to us.”

Luxon would not talk in detail about reports the government was looking at offering bonds / compensation to oil and gas companies, which would compensate them if a future government changed the policy and halted mining permits. He said that would have to go through the Cabinet process.

Today, the Government confirmed the appointment of former National leader Simon Bridges as the new chairman of the NZ Transport Agency - Waka Kotahi.

The announcement was made by Transport Minister Simeon Brown this afternoon.

“Simon brings extensive experience and knowledge in transport policy and governance to the role. He will have a strong focus on delivery and outcomes and ensure that NZTA is working to implement the Government Policy Statement on land transport, which will provide the infrastructure New Zealanders need,” Brown said.

“Transport is a critical part of the Government’s plan for economic growth and productivity, and I look forward to working closely with Simon over the coming years to deliver the Government’s transport objectives,” he said.

Luxon is likely to face questions about the state of the media, following the announcement last week that TVNZ will me making large redundancies and cease broadcasting the Sunday and Fair Go programmes.

Broadcasting Minister Melissa Lee is meant to be taking a paper to Cabinet on the media. Little is known about it, save that Lee wants to update the ageing Broadcasting Act.

The Government has also announced it will phase-in interest deductions for residential landlords. The policy will begin in April, but the coalition agreement signed in December promised deductions would be backdated for the 2023/24 tax year, something that has now changed.

“More costs on landlords mean higher rents. Our Government is going to ease the pressure by restoring interest deductibility for rental properties,” Luxon posted to X, formerly Twitter.

Act had wanted the policy to be phased in more quickly. It is unclear what, if any, concessions Act extracted out of National in return for changing the speed at which the policy comess in.

This week is a recess week in Parliament, meaning MPs will not be meeting in Wellington for regular sittings of Parliament.