Nicola Willis: Finance Minister on the directive for public entities to use wool, Adrian Orr resignation and Reserve Bank funding

The Finance Minister says a move to require wool carpets in state housing makes financial sense. 

Nicola Willis has announced a change to Kainga Ora's supplier agreement that will see it re-open its previously nylon-only carpet tender process. 

From the start of next month, all public entities will also be required to use woollen fibres where practical and appropriate. 

Willis told Mike Hosking officials have told her it makes sense for Kainga Ora to make this change. 

She says it's cost-neutral, and it performs well across a number of other dimensions. 

Nicola Willis says the Reserve Bank should never be exempt from cost-cutting across the public sector. 

Newly released documents show Adrian Orr's abrupt resignation as Governor came after he was denied the Budget allocation he was seeking. 

The Finance Minister says the central bank still has the funding it requires to do its statutory duties. 

She told Hosking the Reserve Bank can't operate as a "gilded palace" – it needs to be fiscally responsible, like all other government departments. 

Willis says any idea that the Reserve Bank doesn't need to abide by the same funding constraints as other Government agencies is wrong. 

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Episode Transcript

Speaker 1 (00:00):
For a person who loves will like me. We've got
the very best of news this morning. The government has
a new supply agreement for woolen carpet in state housing.
Now this is good because Bremworth recently, if you followed this,
backtracked on their wool only policy, which I was sad about. Anyway,
the Ministry of Economic Growth and financi Nicola Willis's with us.
Very good morning to you.

Speaker 2 (00:16):
Good morning. It's a good news Thursday, isn't it, mach.

Speaker 1 (00:18):
It's a very good news Thursday. Is Bremworth specifically involved
in this or is this just anyone who makes wool
carpet is in.

Speaker 2 (00:27):
Well, there were a number of people who tended for
this contract. Apparently they all showed up very well. Kaying Aura,
who are operationally in charge of this, have told me
that I'm not to talk about which supplier has won
the tender at the stage, but we'll look forward to
in telling you that at another date.

Speaker 1 (00:44):
Okay, numbers wise though it stacks up, clearly.

Speaker 2 (00:47):
It really does. So what happened here was that kayeing Aura,
like I think lots of organizations see well, let's tender
for some carpet will make it nylon only tender, and
of course that gcluted Will from the table. They then
restarted the tender after they got a backlash to that,
as they rightly should have. And when Will was given

(01:08):
the chance to show up, it showed up really well.
And I'm advised that actually it's cost neutral, so there's
no extra cost, and of course it performs so well
across a number of other dimensions. So when they were
given a chance to play at the table, they won.

Speaker 1 (01:22):
See. I don't know, I don't want to point fingers here.
Was it the wool industry's fault that they didn't sell
themselves better? Was it a previous government's fault that they
excluded wool, Was it cying Aora's fault for not saying
let's see what we can do patriotically speaking? Or should
everyone take a slice of the blame.

Speaker 2 (01:40):
Well, I think over many years, many people have got
into the habit of thinking will, oh, that's more expensive,
and so there's been a prejudice towards nylon and artificial
fibers and a range of areas. And what we're doing
with our new policy, as we're saying to every government agency,
wipe your minds clear, of those old prejudices, and every

(02:02):
government tender where WILL could be used, we want you
to consider its use and give it a chance to compete,
because actually, when you give it that chance, it competes
very well across a range of dimensions. It's very durable,
it's very healthy, it's very sustainable. This is a product
that is very good for New Zealand because these are
our sheep farmers. So it stacks up in terms of

(02:23):
a value proposition. So from now on, every government agency
when it does attender, we have to consider WILL. And
I think that wall's going to show up really well.

Speaker 1 (02:31):
And if they don't, for whatever reason, go with wool,
is there a question asked of them overtly why not?
And they all need to come up with something specific,
like it was twenty percent too expensive or whatever.

Speaker 2 (02:44):
That's right exactly. So they are now required to use
WILL wherever it is practical and appropriate. If for any
reason they exclude WILL, they have to set out the
reasons why, and we've put out quite a detailed procurement
guideline that takes them through how they need to do that.
And my expectation is this is going to create major
opportunities for the wool industry, because of course, wool isn't

(03:05):
just about carpet, it's about insulation, it's about acoustic panels.
It's been used in all sorts of ways. And you've
got these big government contracts for multi billion dollar fit
outs in buildings. Then that's a massive opportunity for the
wool industry to show up with a new innovative product
and say let's do it here. They do that at
scale in New Zealand, they prove it, then they can
export something similar offshore. So let's do what's good for

(03:29):
our economy, what's good for the taxpayer, and what's good
for our farmers good.

Speaker 1 (03:33):
What's it worth in total? I mean when you say billions,
is it literally billions of dollars worth of.

Speaker 2 (03:37):
Cover millions, millions of tens of kying or again I'm
being told to be careful about all.

Speaker 1 (03:47):
We give us a round number. Is it teens or
hundreds of millions of dollars? I mean it's a massive mess.

Speaker 2 (03:51):
It's going to be tens over time. And of course
the point here is this is for the new state
houses that are being fitted out, but wherever they need
to put brand new carpet into an existing home. They're
also going to use wool, so this will build on itself.
And what I hope is that private sector landlords and
others who are thinking about carpeting are listening to this

(04:12):
and think, well, actually, we've always just defaulted to nylon.
Maybe we should consider war too.

Speaker 1 (04:17):
Good. Quick question about Adrian and or what's the point
of having rules around the Official Information Act if someone
like the Reserve Bank doesn't play by them.

Speaker 2 (04:27):
Well, it's my expectation that every government agency should abide
by its statutory obligations, but they don'ting those under the
Official Information Act. Well, I have made clear that I
think this information could have been released earlier that that
would have been appropriate, and I have also made that
clear to the Chairman of the Reserve Bank Board, Neil Quickly.

Speaker 1 (04:49):
The package or got You're not going to tell us obviously,
but do you know what it is? And why did
he get paid to leave when he packed a sad.

Speaker 2 (04:57):
No? I don't. I have intentionally stood aside from the
employment discussions that occurred between the Reserve Bank Board and
the Governor. And it's again my expectation that any agency
conducting those sorts of discussions meet its public obligations and
its legal obligations, and I've been assured that is the case.

Speaker 1 (05:17):
Your summation as an observer given what we learned yesterday
as to the conduct of the Reserve Bank and adrien
Or through this whole process is what.

Speaker 2 (05:27):
Well, It's pretty simple for me. The Reserve Bank is
no different from any other government agency in the sense
that it needs to provide value for taxpayers money, and
any idea that it somehow doesn't need to abide by
the same funding constraints that we're asking other government agencies
to is wrong. So when I entered the funding negotiation

(05:48):
with the Reserve Bank Board, I made that clear and
I am glad that we got to an outcome where
we've got a reasonable level of funding, which I'm assured
is sufficient for the Reserve Bank to do all of
its statutory jobs, but doesn't allow them to live in
a gilded palace with luxury levels of funding that would
not be appropriate. And I think the Reserve Bank understand that,

(06:09):
and we're going forward together constructively.

Speaker 1 (06:11):
Good stuff. Nichol appreciate time. Nikola wellis Finance Minister, Minister
for Economic Growth.

Speaker 2 (06:16):
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