Nicola Willis: Finance Minister on relief measures for businesses struggling with high power prices, public servant pay increases

The Government could be importing liquefied natural gas to relieve businesses struggling with high power prices. 

An Auckland paper recycling pulp mill with 75 staff is proposing to close. 

Ohakune's Winstone pulp and timber mills are also at the brink of closure, putting 300 jobs on the line. 

Both blame sky rocketing increases in power prices over the years. 

Finance Minister Nicola Willis told Mike Hosking she understands the Government may have to go to drastic measures like importing gas to give relief for businesses. 

She says she's hearing there's a lot of pain and pressure being felt by businesses because of these high prices. 

Willis is also tempering expectations for public servant pay increases. 

The Government's written to public sector agencies ahead of collective negotiations saying they must keep spending reined in, and any increases should be based on performance. 

It follows thousands of jobs being cut in the sector to meet Government budget cuts. 

Willis told Hosking agencies need to be realistic about the challenges in the economy. 

She says in the past public sector pay increases have risen ahead of those in the private sector, and that's not right. 

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Episode Transcript

Speaker 1 (00:00):
New direction coming for the public service. Another of these
letters of expectation from the government. This is a workforce
policy statement that covers everything from pay, equity, diversity, remuneration
to contractor costs. The message from the government around pay
is that collective bargaining and pay increases must come from
budget baselines. The Public Service Minister is, of course Nikola Willis,
who is with us, a very good morning to you.

Speaker 2 (00:18):
Good morning, Mike.

Speaker 1 (00:19):
Do you want to join in the game of guessing
what Adrian's thinking at the moment or not?

Speaker 2 (00:23):
Well, you know, his independent decisions and I need to
separate myself out from them. We've just said, look, we're
getting inflation down. When inflation comes down, interest rates can
follow and he will decide how soon.

Speaker 1 (00:36):
Okay, this letter to the public service is that why now,
given you've been an office for seven or eight months.

Speaker 2 (00:42):
Well, because we're now entering new rounds of collective bargaining
and it's very important going into those negotiations. But government
agencies are realistic about our financial circumstances, which is there
is not much money in the coffers and we need
to be extremely disciplined if we're to hit our budgets.
So that includes howgotiate to pay in times. Pay rises

(01:03):
for the public sector have risen ahead of the private sector,
and that's not quite right. We don't want them leaving
like that is.

Speaker 1 (01:10):
Correct, which is what I was just going to raise.
So wages yesterday, and the unemployment numbers at four point three,
but that's averaged out. The public sector beats the private
sector hands down, doesn't it.

Speaker 2 (01:19):
It does, And that reflects a number of big negotiations
that have gone a reflex pay equity going through. And
we think we're now entering a time of restraint and
moderation and that's going to be effect in the public service.
For good news is we've got inentation coming down, but
people's wages can go a lot further. We're not seeing
prices increase rapidly every week.

Speaker 1 (01:40):
Okay, a couple of things. While I've got your Minister
of finance, hat are we looking to I mean, I
know we're looking, but are we going to have to
import lerg into this country to keep a few businesses open?

Speaker 2 (01:50):
We are looking at the feasibility of that, and that's
because we are in a very dramatic situation. We do
not have enough gas. That means we have significant electricity
shortages and have been experiencing the highest electricity spot prices
in the world. And I'll tell you something about countries

(02:10):
that are poor and energy. They are poor countries. So
we need to get this sorted. We don't want to
see businesses falling over because they can't afford electricity. And
there's no doubt the shortage and gas has contributed to
this significantly. In importing liquefied natural gas could be a solution.

Speaker 1 (02:28):
Okay, So could it be solved if it rained heavily
and the spot price drops and everyone goes fuel or
is this a bigger picture thing that we need to
have some.

Speaker 2 (02:35):
Sort of plan on in the short term. You're right,
if it rained a lot, these problems would not be
as acute. But I don't want to be in a
situation where every winter for the next few years we're
worrying biting our nails for the rain to fall. We
actually need to have some backup capacity. That's what gas
has traditionally been there for. The last government banned the

(02:56):
exploration of it, and we now find ourselves in a
very tricky situation. So we're looking at what we need
to do immediately to keep the lights on affordably, but
then also over the medium term, what may be needed
to make this an electricity rich country. The world is
actually in a race for who can generate electricity affordably
and sustainably. Countries that can will be welcoming industry, new jobs,

(03:20):
the industries of the future, data centers AI. Countries that
can't get it done are going to fall behind, and
I do not want that to.

Speaker 1 (03:27):
Be using the three mills so far, one in Auckland,
two in the center of the North Island. Are you
hearing there are more? In other words, if you're in
that broad industry roughly and it requires electricity, are lots
of people actually in trouble. We just haven't heard about
it yet.

Speaker 2 (03:39):
I'm hearing there is a lot of pain because of
these high spot prices. That is putting a lot of
pressure on a lot of businesses who are desperately searching
some sort of relief. And that is why we are
treating this with urgency and are considering those extraordinary measures
such as the importation of liquid natural gas and the
investments required to do that. These are not normal things

(04:02):
to be having to be thinking about as a government, Mike,
but We've been left in a terrible situation by the
previous government which was reckless in its decision making and
put that very basic commodity, affordable electricity, at risk, and
people should never forget it.

Speaker 1 (04:19):
Megan would said the other day it's not her fault
at all because they hadn't discovered gas in a year,
So no big deal. You say what I say.

Speaker 2 (04:27):
That is absolutely ridiculous. When you say to the industry
you are not allowed to explore for gas, the effectives
no one wants an investment in your country anymore and
you won't be getting any gas. And she did that
even while having no plans to accelerate the building of
wind farms and solar farms, no plan to make up

(04:47):
for that gap and generation. And now we find ourselves
in a situation where we are literally having factories closed down,
with New Zealanders losing their jobs, communities devastated because we
don't have enough electricity. Unacceptable.

Speaker 1 (05:01):
Correct. Nichola Willis, Finance Minister, came on as Public Service Minister.
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