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August 12, 2024 12 mins

The Prime Minister says all options are on the table for tackling the energy crisis. 

Wholesale electricity prices have surged in recent weeks as hydro lake storage nears record lows. 

Christopher Luxon says he's pulled the industry together for discussions about rationing and transferring gas where it needs to go. 

He told Mike Hosking they're looking at a series of short term measures to ensure supply can meet demand. 

Luxon says the bigger question is what medium to long-term measures need to be taken to ensure energy security. 

On another note, the Prime Minister says congestion charging could boost productivity and clear up the roads. 

Transport Minister Simeon Brown has confirmed the Government's introducing legislation this year to allow for so-called "time of use charging". 

It'll allow councils to propose charges for using certain roads at certain peak hours. 

Luxon told Hosking congestion results in slower deliveries and other economic issues. 

He says if it's done right, congestion charges can result in an 8-12% reduction in congestion. 

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
It is Prime minter is to Tuesday. Crystal Lection's with
us in the studio. Good morning. Not that it's nice
to not see you, but the reason you are here
is there is no parliament, yes, and you've got business
to do. You've got business to do. When you've got
legislation to pass and you announced yesterday a congestion charge
which requires legislation. You can't pass the legislation because the
parliament's not open. Why are we doing more work?

Speaker 2 (00:22):
You're on one of my things, which is coming new
to politics. You sort of look at it and go, man,
the parliament stops December fifth, used to stop December ten,
and then by the time you get through sort of
anniversary weekend and then waitangi it's sort of mid February
by the time it starts up again, and then you
go for a bit. There's some we've done a lot
of things under urgency, so we've had some quite long sessions.
But yeah, it's one of the things I talked to

(00:43):
Chris Bishop, who's Leader of the House, about how do we.

Speaker 1 (00:44):
Are you going to change it? So you had three
weeks correct me up and wrong, three weeks off for
the school holidays. You came back for the last two weeks.

Speaker 2 (00:51):
And are off again as I am, just for a week.
I mean, as I understand it, it's because of the
way it was face in the first half. There's a
whole bunch of ten reasons for it. But look, the
bottom line is we're working pretty hard and I think
you know, we've got a big legislative Forginia to get
done before Christmas, and frankly we'll just be running into urgency,
which means that we go from nine to midnight until

(01:11):
we get it done, all right, so we go into
weekends if we have to.

Speaker 1 (01:14):
The congestion. Not that I'm against it, but to suggest,
assuming and did yesterday, it's not about raising revenue was
simply not true, because it raised well revenue.

Speaker 2 (01:22):
Yeah, so it raises revenue and that will be used
on transport infrastructure and it can't be used on pet
projects and silly stuff. But the real reason for it,
and there's actually been all political parties over the last
two or three years have been very supportive of this
in Parliament, is that when you look around the world,
if you do it right, you can get an eight
to twelve percent reduction and congestion. So if you think
about school holidays in Auckland, that's about sort of what

(01:44):
that would look like. And then when you look at
the actual time it takes per kilometer in Auckland versus say,
similar cities in Australia, we've got a congestion problem. And
congestion the problem with that is the trade. You can't
go do another job. You know, you've got slow deliveries.
You've got a whole bunch of economic and productivity roads.

Speaker 1 (02:00):
Yeah, we do poor roads.

Speaker 2 (02:01):
That's why we're trying to spend a lot of money
investing and upgrading those roads. But congestion charging is something
that will you know, something will open it up and
we'll get some submissions on it will work with the
council line.

Speaker 1 (02:12):
The Wayne Brown dream of taking some power off at
this is sum and Brown as well. When is this
actually going to happen.

Speaker 2 (02:18):
It's not going to happen. We're not going to merge
at and n z t A. But I think the
mayor and ourselves are pretty unhappy with auckland transports performance
and the Meal will continue to talk about what they
can do to do.

Speaker 1 (02:29):
So that's what they're doing. They're just going to talk
some more well, I'll.

Speaker 2 (02:32):
Let them sort that out. But the bottom line is
I don't think anyone a one hundred percent happy with
Auckland transports. No.

Speaker 1 (02:36):
But in not being happy, don't you want to do
something about it?

Speaker 2 (02:39):
Well, we may well do something about it, but that'll
be something that will work with the mirror. Yeah, but
he would tell you to take some power off them.
He might have a whole bunch of different ideas and
we might have.

Speaker 1 (02:49):
So my understanding was you were looking at doing something tangible.

Speaker 2 (02:52):
You're not, as I said, I think what I heard
yesterday was people were saying, oh, we're going to merge
at with n z TA and that's not going to happen.

Speaker 1 (02:59):
Okay, As regards the power crisis, has anything happened since
I talked to you about this last week apart from
we're not happy? Yep.

Speaker 2 (03:08):
There's been rationing of gas so that actually we're getting
it from places where it needs to get out of
to actually into the energy system. What's happening is I mean, look,
if you back up the truck of it, this is
a function of actually the any of that aill and
gas band and as a result, there's been no local
exploration of gas and as a result, when we've got
a dry year like we have now, we've got caught

(03:30):
horribly in terms of we're short. That is affecting our
industrial basis.

Speaker 1 (03:34):
So you're not fixing that tomorrow, even if you say, go, look,
guess there's no guarantee.

Speaker 2 (03:38):
No, but there are short term things that I think
we can do around electricity, gas, and then I think
there are other things around structure of the sector that
we will look at as well.

Speaker 1 (03:45):
What do you say to Mike Foots, she was on
the program yesterday from contact right, you see, there's nothing
where we're investing. It'll get there eventually. It's just an
industry and transition. Is that fear or not.

Speaker 2 (03:56):
I get that they're doing a lot of investment and
they've got more certainty now to invest. Heaven, we've got
ty sworded, got rid of Lake Onslow, We're going to
end the oil and gas ban ultimately. But I would
just say, as you also, you know, when you're running
at one thousand dollars per mega wat as we were
a week before last, and you've got Australia and others
running at fifty to one hundred, we've got a problem.
And the problem is Essentially, we're now having to import

(04:19):
huge amounts of Indonesian coal to actually get that Huntley
Power station others working. When we could have had gas
and now we've got no gas locally because it got
ended five years ago. Why would you invest in something
that was going to.

Speaker 1 (04:30):
Be that is true? He said, there's an announcement coming
on gas. Do you know anything about that or not?

Speaker 2 (04:35):
I might be aware of something, but that you're aware
of it, I'll let them in out news.

Speaker 1 (04:39):
Is it substantial or not? Yeah, yeah, it does it.

Speaker 2 (04:42):
So there's a series of what we've done is we've
got the industry together probably about eight weeks twelve weeks ago,
and we're actually talking about how do we ration supply,
how do we actually get gas from one place, you know,
to another place where we need it to get to
to consumers ultimately and to support our industrial base.

Speaker 1 (04:57):
So that will alleviate the problem.

Speaker 2 (04:58):
We have right series of short term tactical things that
we can do to make sure that we've got the
supply and demand working better. But the bigger question is
what are the longer term, medium term actions that we
need to get sorted so that we don't have this
energy security challenge. We shouldn't have this in this country.
We've got abundant natural resources. If we have gas, which
we're going to need when we've got dry rivers and

(05:19):
dry lakes and no wind and no sun, are we
going to need that?

Speaker 1 (05:23):
Does the industry need up ending or not?

Speaker 2 (05:27):
Well, we're up to looking at anything and everything. All
options are on the tables.

Speaker 1 (05:30):
He says, it doesn't. It's fine, we'll get there. Do
you say differently or not?

Speaker 2 (05:34):
Where that's one piece of work. They want to look
at his industry structure?

Speaker 1 (05:36):
Okay, because where's the ComCom and the EA. They don't
seem either awake or alert to what's going on or
able to do anything.

Speaker 2 (05:43):
Those are all part of a bucket of work that
some men will do around industry structure.

Speaker 1 (05:48):
So when Fonterra yesterday and ENSCO say this affects our
export competitiveness time, it's unacceptable.

Speaker 2 (05:55):
Utterly unacceptable, utterly unacceptable because essentially you've got people like
Fonterra having to choke back demand or supply, you know,
and they end up spilling melk. Ultimately, you've got meals
as you've seen recently that actually under huge pressure Whinstone
paper you know others tea wise choking back, it's use
because it's trying to free up and spill that altruists
into the system.

Speaker 1 (06:16):
So you know they're all short, you.

Speaker 2 (06:17):
Know, band aid solutions, but you actually need to get
a proper structure in place to say and half the
problem is this, if you're in that sector, you don't
have confidence to invest because the rules have kept changing
on you. And so you know that's why knocking off
Lake onso because we're not going to spend sixteen to
thirty billion dollars building that with public money. But that
means that they expect those gent tailors to invest in

(06:39):
proper infrastructure and proper new investments. We need to make
the oil and gas thing as a function of no
explorations been going on, so you know you've got that's
a five year delayed to get domestic gas back up
to where it needs to get to. So we've got
to think through that piece. And then there's genuine questions
around the structure of the market. Is it actually working
for us when we've got expensive energy and that's a

(06:59):
big because it does make our competitive. You just bus down.

Speaker 1 (07:03):
Local water done well. Any regrets about that name really
proud of it, really proud of it? Are you who
came up with that.

Speaker 2 (07:12):
Water like getting user and back on track? I think
I streamed it up till in the morning.

Speaker 1 (07:15):
So far, so borrowing, So here are my concerns about it.
So borrowing five times is only good if it solves
the problem. What if you borrow five times it doesn't
solve your problem? Well, what we've got to do.

Speaker 2 (07:25):
So if I take Auckland as an example, I think
it's a KKR solution. You've basically got out and said,
you've got this thing called water care. It's working on
a project at the moment, central interceptor, it's been working
on it for a while, got a whole bunch of
Italian tunnelers there, and then they've got no confidence because
they've got no money to know what they're rolling in
two next and actually now that they can go have
their own separate balance sheet, they can go borrow that

(07:46):
money up to five times. These are long run assets
at are thirty fifty seventy years locked down the road.
They can invest properly with a proper plan and actually
roll into another project straight after this one. So there's
about two billion dollars I think they can spin the
next ten years as a function of doing it. But
the genius of it is that then there's eight hundred
million dollars freed up from Auckland Council who were planning

(08:06):
to put that into water care because they don't need
to and they can put that into other stuff and
it's not sexy stuff. But actually just getting the mechanism
right has actually been quite important because the last lot
spent one point two five billion dollars looking into this
with one big mega model YEP, and for a couple
of hundred thousand dollars we found a solution that meets
the rating agent credit agencies as well as I was

(08:27):
getting a better stay.

Speaker 1 (08:27):
Do you realistically think councils will coalesce if they're not
geographically connected to each other?

Speaker 2 (08:35):
They will the ones that are adjacent. If you think
about the Hawks Bay, I get that four district councilors
one regional council want to come together. There are councils
in South Taranaki across the system YEP. Most of the
moment the last few years have actually said yeah, we've
we've got to collaborate on this. And then you get
to a subregional sort of focus rather than having to
deal with eighty two district and regional.

Speaker 1 (08:55):
My next concern is when they go borrow the five times,
there's an interest bill on that, and some councils won't
pay that down because they're useless, and some will so
I'm then, as a ratepayer, stuck with paying off a
debt and interest on the debt literally foreveranta.

Speaker 2 (09:09):
Well, they will be able to access the lowest POSSI.
If you're not paying it down, then just pass the
alternative as you don't you do what we've seen across
the country, which is, you know, people go build convention
centers and invest in hotels and do other dumb things
rather than actually do the things they're supposed to do,
which is the basics brilliantly and making sure there's water
assets that are sort.

Speaker 1 (09:28):
Of I don't want to spend a lot of time
in the welfare because that seems to explain itself. If
you want to behave yourself, you'll be fine. If you
don't want to.

Speaker 2 (09:33):
Play responsibilities, show up, do some basic things.

Speaker 1 (09:36):
Get It does worry me is from last week's unemployment numbers,
half the jobs lost were kids, So that indicates to
me they've got no qualifications. They've left school with no qualifications. Yep.
They've got nothing to offer the modern economy yep. What
are you doing about it? Yep?

Speaker 2 (09:50):
So the reality I'm worried about that too. You've got
fifty five percent of the kids not at school regularly,
then they just roll straight onto unemployment eighteen to twenty four.
We've got forty two thousand of them at the moment.
What we're doing is we put four thousand more phone
case managers in to try and get these kids, you know, contacted.
We've got two one hundred extra community organizations plugged in

(10:11):
with job support and we've got to get these kids
off welfare and into work. And we've got to teach
them that they've got to wake up, get to work,
do the basic.

Speaker 1 (10:18):
Do you force them to tune anything? I mean sure,
because this is a tough economy apart from anything else,
and they've got nothing to work with the economy. No
AND's hiring them, so shure of bringing them up and
going get a Brian, how are you feeling today? What
do you want?

Speaker 2 (10:29):
You've got to get them into it. You've got to
get them into work. So there are jobs there. I mean,
like I spoke to people in horticulture last week, you
still can't get New Zealanders showing up for jobs or
lasting more than twenty hours a week. We need massive
amounts of digger drivers. Are cool jobs, you know, and
you know we need those people in that system because
we're actually.

Speaker 1 (10:47):
We've been setting the jobs out there for young New
Zealanders who do want to work.

Speaker 2 (10:51):
Yeah, absolutely, there are guys is and you know, think
about it. We've got what we've gone from three point
two percent unemployment, which was record lows, we're still at
sort of four point six in the history of our country.
That's pretty low.

Speaker 1 (11:02):
Still, tell me why I had Sunny Koschel on the program,
Cucil on the program yesterday. That crime group you set up, Yep,
you stuck them on the committee to silence them. No,
they haven't even started meeting yet. What the hell's going on.
I'll talk to Godsmith about that and the whip and

(11:22):
get on with that. You guys said that when you
set this group up it would last for two years,
but the ideas will be coming forthwith in the next
couple of weeks. But at least a month they haven't
even met.

Speaker 2 (11:30):
Well, they need to get meeting, then doesn't it.

Speaker 1 (11:32):
You need you need to crack the whip. But I'll
tell you what.

Speaker 2 (11:34):
I am pleased by the LRD order that we got
fifty two cops on the beat in three weeks and
the month of July and lo and behold.

Speaker 1 (11:41):
You shouldn't have said that because what did the retail
crime numbers say yesterday? Yeah, but I've gone from forty
one and deies, dearies and service station account does it?
And I'm just trying to give you a perspective to
say that, actually, when you get out there and you
actually talk about what's happening for the down in cbd Auckland,
it's starting to get better. Okay, would you rather be
interviewed by me or Glenn?

Speaker 2 (12:02):
Definitely? You. Yeah, there's no, there's no, there's no you're peerless, Mike.
I mean there's just no, there's no comparator, you know.

Speaker 1 (12:09):
You take that. Nice to see Christoph election in the
prime Minister. For more from the Mic Asking Breakfast, listen
live to news Talks it'd be from six am weekdays,
or follow the podcast on iHeartRadio.
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