For a net oil importer such as New Zealand, it reduces disposable incomes and demand (suggesting looser policy is appropriate), but also has a direct upward impact on inflation and presents upward inflation expectations risks (suggesting tighter policy is appropriate). The exchange rate will respond to the terms of trade movement in this case also.
These spillovers were most evident in Queensland and Western Australia, where, for a while, growth in employment, investment and income were all quite weak. The good news is that these negative spillovers from lower levels of mining investment are now fading. This was first evident in Queensland, where the labour market began to improve in 2015 (Graph 2).