Category: Business

Source: Radio New Zealand

The minister responsible for fuel security says he has received proposals from import terminals to open up more diesel capacity, but any recommission of tanks would be a while off.

Associate Energy Minister Shane Jones said almost half of Marsden Point’s available storage was being used, and there had been a proposal to refurbish unused and empty tanks to boost diesel storage.

The tanks had been empty since the closure of the refinery in 2022, with Marsden Point now operating solely as an import and storage terminal for refined oil.

Jones said he had spoken to Rob Buchanan, the chief executive of Channel Infrastructure, which owned and operated Marsden Point.

“He said that there could be two tanks that could be repurposed, and he has sent through a proposal to us. However, because of the degradation since the closure of the refinery, it will take time,” Jones said.

“They have put forward a proposal to work, as I understand, with the Crown, to refurbish some storage tanks. Then the officials are working through, ‘do they think it’s a sensible thing to do and what it’s likely to cost the Crown and Channel if we were to work together?'”

He expected to receive that advice from officials “sooner, rather than later”.

Jones had also spoken to the chief executive of the Port of Taranaki, who had told him there could be up to three days of storage there.

“But two thirds of the potential storage is owned by Methanex, so I’m in no hurry to chase Methanex out of New Zealand,” Jones said, adding Taranaki would also need some new infrastructure.

“I think Marsden Point are confident, if they can get some regulatory relief. Taranaki said they have to build a new bund, because the regulations have changed. So look, I think that if we’re going to do this, we need to strip away the regulations without creating a public nuisance, and also arrive at a point where we can, if not share the costs, work out how soon it can be done.”

Combined, Jones estimated it would add “several days” to diesel storage capacity, with costs going towards the refurbishment and then purchasing the diesel.

Those costs, Jones expected, would be shared between the Crown and Channel.

A spokesperson for Channel Infrastructure said Channel was aware of Jones’ comments, but it did not comment on discussions with any of its customers.

“Channel has identified some very preliminary options for significantly increasing diesel storage capacity at Marsden Point,” the spokesperson said.

The spokesperson said Channel had almost 300 million litres of fuel storage in service at Marsden Point, and an additional 350 million litres of tanks that “could be converted” to provide additional fuel storage if required.

“The government’s Fuel Security Study concluded that the best way to improve New Zealand’s resilience was to increase the in-country storage of fuels that are critical to keeping our economy moving, and Channel stands ready to put all efforts into safely assisting with additional fuel resiliency measures, should we be asked to provide them.”

Fuel importers were required by law to hold 28 days’ worth of petrol, 24 days of jet fuel, and 21 days of diesel.

From 2028, the minimum requirement for diesel would increase to 28 days, if the fuel importer had more than 10 percent of the market share.

In 2024, the government stopped work on procuring 70 million litres of reserve diesel stock, saying it carried significant capital cost and Cabinet would need a robust understanding of options and their impacts before making decisions.

The fuel would have been funded through the Petroleum or Engine Fuels Monitoring Levy.

Instead, the government decided to explore other options to increase the diesel reserves from 21 days to 28 by 2028, and commissioned the Ministry of Business, Innovation, and Employment to study New Zealand’s fuel security requirements.

Under questioning from Labour’s energy spokesperson Megan Woods in the House on Tuesday, Jones said there was “no budget, no proposal that I could credibly take forward to my colleagues” on the reserve diesel stock.

New Zealand First has continued to blame Labour for the closure of the refinery in 2022, and has been attempting to tie the “degradation” of the storage capacity to the closure.

New Zealand First leader Winston Peters went as far as to suggest the refinery was “deliberately shut down, with the government’s connivance”.

In 2021, Labour had the option of providing a loan or subsidy to keep the refinery open, but then-minister Woods said there was not a strong case.

“There does not appear to be a clear case for maintaining refinery operations for fuel resilience reasons, except to address an exceptional ‘no fuel imports’ scenario,” she wrote in a 2021 Cabinet paper.

“This is an unlikely scenario, but not entirely implausible, therefore I believe the option of maintaining refinery capacity warrants an active decision by government.”

In the House, Jones accused Woods of making an “active decision” to close the refinery.

“If you close down 700 million litres of storage, 70 million is a mere drop,” he said.

Labour has repeatedly said the closure was a business decision made by its private owners, not a government decision.

“At most, you’d be talking about five days of unprocessed crude oil, in addition to whatever we have in terms of processed fuel onshore. Five days in the grand scheme of what we’re dealing with at the moment isn’t very much,” said Labour leader Chris Hipkins.

“There are certainly other things the government could have done over the last two years to increase our resilience. Marsden Point would be right at the bottom of that list.”

During Question Time, Peters asked the prime minister if all the “anxiety” around supplementary reserves would be relevant if “they hadn’t shut down Marsden Point?”

“It was a critical piece of national infrastructure and that was a decision of a previous government,” Christopher Luxon responded.

Luxon was then made to withdraw the comment, after Hipkins raised a point of order to argue the previous government had made no such decision.

On Tuesday, Woods told RNZ she was supportive of proposals for more storage space.

“Absolutely, and I would hope the government’s looking at that right now,” she said.

But she accused the government of being “short sighted” for scrapping the 70 million litre strategic reserve plans, which were to be a “worst case scenario” to ensure critical services like fire engines, ambulances, and food distribution could keep running.

That would have been in place this year, Woods said, whereas the government’s increased requirement for 28 days of diesel holdings would not come into place until 2028.

“One of the reasons the government scrapped that strategic reserve and got rid of the request for proposals that was out there, they said it was cost. It’s several million dollars to build that facility, in terms of being able to hold it, but there was up to $100 million of built-up levy sitting in the Petrol Levy fund, essentially that had built up over Covid that we were proposing to use for that,” she said.

“Instead, the government has gone for an option where the fuel companies themselves will hold this additional diesel, which will cost motorists more for diesel at the pump, and it will be two years’ delay.”

ACT leader David Seymour has previously disagreed with Jones on the economics of keeping the Marsden Point refinery open.

But he saw the merits on using more of its storage capacity.

“The reality is it would probably be a levy on the fuels themselves. But if that was to be proposed, I think we would look at it very carefully on the costs and benefits. I think the world just changed, and we can see that having some more independence is probably not a bad bit of room to have.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Industry groups and local government leaders are calling for the resurrection of a Buy Kiwi Made campaign as alarms sound over new job losses and factory closures.

McCain Foods announced on Tuesday it would close its Hastings processing plant weeks after Watties proposed cuts and closures in Hastings, Dunedin, Auckland and Christchurch.

Central Hawke’s Bay mayor Will Foley said the news came as shock, and he did not know how many people were affected.

But once factory workers and those across the supply chain were factored in, it would number in the hundreds, he said.

“If you think of all the contractors that grow the crops, harvest the crops, the trucking companies, the logistics of moving the crops from farm to factories and from there to our supermarkets, you’d be talking about hundreds and hundreds of people impacted. Specifically losing their jobs, perhaps not as many on day one, but the longer term impact we’ll be getting into the hundreds, if not a thousand across Hawke’s Bay.”

Vegetable growing had played a huge role in Hawke’s Bay, including being the home of Watties, which was founded in Hastings in 1934.

The mayor wanted to see a discussion at a national level about the closures and their causes.

“What can we do to address some of these issues and help out the businesses that are still there, because otherwise we’re just going to see this happen again and again.”

Energy and production costs and inflation would all have played a part in the decision, he said.

“A lot of companies and industries affected by Cyclone Gabrielle citied concerns back then about the cost of energy making them contemplate not rebuilding their businesses, as well as the cost of production and such high inflation across the board.”

Foley was keen to see more education and information about the importance of buying New Zealand-made, even if it meant paying a little extra.

“We’re not just losing the more expensive product, we’re losing the whole supply chain and employment and logistics and everything. We might not notice the change overnight, but we’ll notice it eventually as we lose more and more.

“Educating people around buying New Zealand-made and the benefits over and above just buying that product, what it gives to New Zealand Inc is definitely something that should be highlighted and be made more aware to the population after decisions like this,” he said.

The closure would hasten a move away from farming for some, especially those already considering retirement.

Others might consider converting to other types of farming, such as dairy, sheep and beef or apples, while others would look at subdividing for housing – though it would be better to keep productive land for food production, Foley said.

Current issues around fuel supply served as a stark reminder of supply chain vulnerabilities and food security challenges.

“It could be no different with food if similar things happen and supply chains get impacted and ships don’t arrive. We certainly need to try and preserve what we’ve got already and what we produce in this country.”

Buy NZ Made was first launched in the late 1980s with the slogan “Buy NZ Made & Keep Your Country Working”, though organised campaigns to encourage shoppers to buy local date back to the turn of last century.

The concept recieved a boost as part of the co-operation agreement between the Greens and Labour in 2005, after the Green Party negotiated $11.5 million towards a Buy Kiwi Made campaign, with former Green co-leader Rod Donald as spokesperson. After his death, Green MP Sue Bradford led the programme, which included a marketing push and increased use of New Zealand-made products in government procurement.

The National government suspended the programme in 2008 but BusinessNZ continued to run the parallel Buy NZ Made campaign.

Process Vegetables New Zealand chair David Hadfield said New Zealand consumers needed to buy locally grown produce.

“Otherwise they’re going to wake up one day and there won’t be any and then we’ll be relying on other countries to supply us and we don’t know when the next Covid or a bigger conflict will happen and the boats aren’t coming here with product on board.

“We’re learning in a pretty drastic way with fuel at the moment, aren’t we, about what happens when we have to bring it all in?”

While local products could be more expensive, the bulk of the profit was made after vegetables left the processor, he said.

“The grower is getting about 10 percent of what a packet of peas sells for.”

He wanted a closer look at supermarket margins – which differed by department – as well as the role of distribution centres.

“New Zealanders definitely need to be looking at buying New Zealand grown,” Hadfield said, and should pay close attention to labelling.

“Look at where it’s growing, not where it’s packaged, because there’s quite a bit of stuff coming into the country in bulk and then getting packaged to you,” he said.

It was impossible for New Zealanders to compete with countries where growers were subsidised or where pay and safety regulations were very low, Hadfield said.

The government also needed to investigate imported produce and whether there may be cases of dumping.

“I don’t know the government’s done anything through the Commerce Commission or anybody else to look at that.”

In early March, Watties proposed closing factories in Auckland, Dunedin and Christchurch, and shutting down processing lines at one of its Hastings factories.

The move would see 350 workers made redundant, 220 suppliers affected and the end of Wattie’s frozen vegetables, Gregg’s coffee and other household names.

Submissions on the proposal close this week.

In September, Wattie’s reduced its Hawke’s Bay peach production, cutting the contracts of some suppliers in the face of what it claimed was dumping from cheaper markets.

An investigation later found Chinese company J&G International Co. Ltd had been dumping peaches, causing “material injury to the New Zealand industry”.

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Source: Radio New Zealand

Karitane, in Dunedin, and Blackball in Grey District experienced house value increases of 6 percent in the three months to March, while Little Wanganui, in Buller, dropped by the same amount.

It’s a mixed picture that shows the uneven nature of the housing market at the moment, property data firm Cotality said.

It has released its latest update of suburb-level house value data, which shows 56 percent of suburbs tracked had flat or rising standalone house values in the three months to March.

That is up from 44 percent three months earlier.

Cotality chief property economist Kelvin Davidson said it showed that while at a high level the market seemed to be trending sideways, buyers and sellers around the country would have varying experiences.

“The proportion of suburbs that have seen price increase is starting to grow a little bit. I think that’s consistent with what we’ve seen over the past couple of months in higher-level home value indices… perhaps signs of a little bit of growth there and it’s just reflecting that broadening out across more suburbs.”

Thirty suburbs increased in value by more than 3 percent, many of which were in Southland, Otago and the West Coast.

Davidson said relatively better affordability and the strength of the farming sector at a regional level had probably supported housing demand in those regions.

“Many areas where we are seeing growth are the sort of provincial regional areas where affordability is a bit better, the farming sector is going well which is supporting cash flow in those areas and just general economic activity and confidence.

“Affordability’s better, not only in terms of the absolute level of house prices, but in relation to incomes as well.

“So affordability is a bit more supportive, the underlying economy is a bit more supportive, so we’ve seen a bit more growth, as opposed to parts of the main centres where service activity is a bigger part of the economy, and that’s still struggling a little bit, and values are a bit more restrained in those areas.

He said lower mortgage rates were also likely to have helped confidence over the period.,

But he said it should be characterised as resilience rather than a boom.

In the main centres, Crofton Downs and Kelburn in Wellington were up 3 percent to 4 percent while Stillwater in Auckland and Aranui in Christchurch were up 2 percent.

Little Wanganui in Buller fell by around 6 percent, while Wellsford in Auckland’s Rodney district dropped by almost 3.5 percent.

“”When you drill down to suburb-level data, conditions become much more varied. Some areas are already seeing values stabilise or edge higher, while others remain softer depending on local economic conditions, supply levels and affordability,” Davidson said.

Among standalone houses, Herne Bay in Auckland was the country’s most expensive suburb, with a median house value of around $2.99 million, followed by Saint Mary’s Bay at $2.86 million.

At the other end of the spectrum, several suburbs had median house values below $300,000, including Patea in South Taranaki, Blackball in Grey District, and Clinton in Clutha.

Davidson said international conflict was likely to keep a lid on confidence in the short term.

“It’s not difficult to imagine that buyer and seller confidence remains pretty cautious, and common indicators a little bit better, mortgage rates are down, but that caution factor could hang around, or in fact even get a bit more cautious.

“You’d imagine that housing market indicators could well remain pretty soggy for the next little while too, so you’ll see how it plays out.

“We’re seeing property values pretty flat, rents pretty flat, house building costs are flat, so there’s lots of inflation concerns, but the housing market for once is not one of those concerns.

So that’s a bit of a silver lining for the Reserve Bank.”

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Source: Radio New Zealand

Christchurch locals say the city is prospering and heading in the right direction, on the back of an ASB report finding Canterbury is the best place to be in the country economically.

The region topped ASB’s Regional Economic Scoreboard for the second quarter in a row.

The survey – covering the final quarter of 2025 – showed Canterbury outperformed the rest of the country in nearly every measure, including employment, retail spending, housing activity, and population growth.

Most locals RNZ spoke to in central Christchurch on Tuesday felt the city was doing well.

“I agree [with the report], it’s a great place to live. It’s an ever-growing city, it has grown so much since the earthquakes, the people and the city that it’s growing into is very cool,” a woman said.

“I think the confidence is pretty high, people seem to be quite happy, you’ve got more flights coming into the airport, tourism is doing well. Fuel’s a bit of a worry now, I think there’s a bit of uncertainty now so hopefully things keep going as they have been,” a man said.

“It doesn’t feel like the economy is that great. It feels like every week we’re spending more and more. My friends and colleagues in Christchurch we’re all talking about I dipped into my savings this week, and ‘oh did you see how much it costs to park now’, everything feels like it’s going up in price,” one woman said.

Paige Parnell, the manager of fitness clothing store LSKD in the central city, said business had been booming and they had been getting about 1000 people through the door every Saturday.

She believed Christchurch was a top tier place to be for a retailer.

“I’ve worked with other retailers, we’ve opened up down here and it just thrives, so Christchurch does really well. I think it’s the culture, everyone here is so lovely, I’m originally from Auckland so I’ve kind of travelled around a little bit but everyone here is just so friendly, everyone wants to stop and have a conversation and everyone wants to come into a store and see the vibe,” she said.

Christchurch central Bohemian Bakery manager Barsha Gurunj said strong business had meant the bakery chain had been able to expand to five locations in the city.

She said her store had great support from locals, but there was good and bad with Christchurch being so in demand for businesses.

“I think it is a tough competition, since a lot of bakeries are opening and a lot of cafes are opening as well, but since we are open for a pretty long time like five to seven years I think it is going good,” she said.

ASB chief economist Nick Tuffley said there had been a lot of development in Canterbury.

“So you’ve had the stadium, and you’ve also had quite a lot of other development happening in that region as well. So it’s all been very supportive of employment growth, retail spending, and the housing market also doing relatively well in the region,” he said.

The ASB Regional Economic Scoreboard had Otago and Waikato tied for second place, with Auckland climbing to fourth.

Wellington ranked last of the 16 regions thanks to a weak housing market, low construction and discretionary spending, despite an improving jobs market.

ASB warned the conflict in the Middle East would create fresh headwinds for both growth and inflation.

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Source: Radio New Zealand

The Warehouse has been fined more than $200,000 for selling a toy that was a choking risk for children under three.

The Commerce Commission said the “Roo Crew Take-Apart Vehicle Toys” were potentially dangerous because they contained multiple small parts and had failed several safety tests.

It said the District Court had imposed a fine of $234,000.

Commission head of Fair Trading and Product Safety Investigations Simon Pope said: “While the toys did carry some warnings, they were labelled and marketed for use by children aged 36 months or under.

“Multiple parts came off each variation of the toy, and they failed small parts testing.”

This meant they did not comply with the product safety standard under the Fair Trading Act.

The Warehouse previously issued a voluntary recall notice for the toy.

The Commission said it encouraged anyone who still had one of the products to return them for a full refund.

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Source: Radio New Zealand

An independent review is to take a warts-and-all look at Whanganui District Council’s commercial pilot school, which is closing facing an $11 million loss.

Councillors approved the review of the New Zealand International Commercial Pilot Academy (NZICPA) 9-2 at a full council meeting today

Ahead of the vote, Mayor Andrew Tripe told councillors it was important the organisation learned from its mistakes and not “waste a crisis” and find out exactly what happened, so it could be more disciplined with future investments.

“Today we receive a very honest report about the NZICPA,” he said. “We are looking at a total loss of $11 million over the 11-year life of the investment and the effect on rates this coming year is 0.8 percent.

“This is a difficult number to digest, but we will not hide from it and we are choosing a controlled responsible divestment to ensure aviation training here continues without the financial risk to this council.”

Tripe said the academy was born from a desire to see Whanganui Airport thrive and to bring a new industry to the city.

“At it’s peak it was a success contributing $9.8 million to our annual GDP and supporting about 100 jobs.”

But the world changed after Covid-19 lockdowns, the withdrawal of Provincial Growth Fund support for an Advanced Aviation Hub and other factors meant the operation was no longer sustainable for ratepayers, Tripe said.

Council bought the academy – then called Flight Training Manawatū – in 2015 for $800,000 via its commercial arm Whanganui Holdings.

Later rebranded as the NZICPA it would close in June.

The $11 million loss was based on an estimated loss on assets sales – including aircraft – and other costs of $2.5 million, and operating losses of $8.5 million.

An independent review was estimated to cost between $50,000 to $150,000.

A internal council report prepared by chief financial officer Mike Fermor, which laid bare issues faced by the flight academy, recommended the review “to support transparency and capture lessons from the experience for future council investments”.

Councillor Charlotte Mesler spoke in favour of the review.

“We do still owe our community some clear answers about what we did know, what risks were identified or missed and how did we respond when things started to go wrong?”

She said that could only be achieved through a truly independent review process.

“Without that level of scrutiny we risk marking our own homework.”

Councillor Rob Vinsen baulked at the cost of the review.

“I cannot see the point of spending up to $100,000 for information we already know. This report on our agenda is extensive.

“It’s a very very good report which explains exactly what has gone on since the first entry on 6 of December 2017 … purchasing three Cessna.

“I don’t believe you need to hire a consultant to tell us that. The new chief executive could lead and internal review with their team and come up with any of that information. It’s all there..”

Fermor’s report found the flight school was set up with the best of intentions to boost the local economy, create jobs, attract international students, and increase activity at Whanganui Airport, but was hit by a series of setbacks.

These included border closures during Covid-19, which it survived due to $300,000 in council loans, the withdrawal of Provincial Growth Fund support for a proposed Advanced Aviation Hub and the closure of key building due to earthquake risk

In 2025, the NZICPA’s accreditation was also temporarily suspended during a Civil Aviation Authority safety investigation “materially changing its risk profile” prompting council to pump in another $2.3 million to prop up the pilot school.

At this stage the focus turned to managing risk and looking for a new operator for the struggling flight school.

It wasn’t all bad, while it operated the flight academy returned tangible benefits contributing approximately $9.8 million per year to local GDP and supporting about 96 full-time equivalent jobs at its peak, the report said.

Although a buyer was not found for NZICPA, Oamaru-based New Zealand Airline Academy – which looked at a purchase – was now operating a pilot school at Whanganui Airport and paying an $829,000 annual leases.

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Source: Radio New Zealand

Commentators are split on whether the fuel support package announced by the government on Tuesday is generous – or leaving out some of the most needy New Zealanders.

The government announced it would give $50 a week to families who qualify for the in-work tax credit.

This means they must be a parent or caregiver working at least 30 hours a week combined as a couple or 20 hours as a single parent, not receiving a main benefit.

In the current tax year, the income cut-off for receiving the tax credit was around $89,000 of annual household income for a family with one child, $112,000 for a family with two children and $135,000 for a family with three children.

The payment would continue until the price of 91 petrol drops below $3 a litre for four consecutive weeks, or a year, whichever comes first.

About 143,000 households would receive the $50 in full, from April 7. Another 14,000 would receive payment at a lower rate.

Isaac Gunson, spokesperson for the Child Poverty Action Group, said it would help working for families but there was nothing for people relying on benefits.

“Close to a quarter of a million children live in households receiving a core benefit and the idea that there’s no additional support for them that will be made available is pretty outrageous.”

While Finance Minister Nicola Willis said they were potentially less affected because they did not have to travel to work, Gunson said they would still need to travel for groceries or job interviews.

He said the 3.1 percent increase in benefits from April 1 would not be enough.

“The idea that benefit dependent households won’t face as big a downturn in their finances because they don’t have the same obligations to go to work… that just doesn’t stand up.”

But Simplicity chief economist Shamubeel Eaqub said the policy was surprisingly generous, because the average amount that households spent on fuel each week before prices started to rise was $65.

“The immediate sticking point is going to be people who need to travel to work … this at least takes away one of those critical concerns that people might have had.”

The support package would cost up to $373 million and be paid from the Budget 2026 operating allowance.

Eaqub said the government might earn an extra $180 million in GST revenue as a result of higher petrol prices.

But Infometrics chief executive Brad Olsen said it was likely that would be diverted spending from other things, if the petrol price was higher.

“If you have to spend a whole bunch more on fuel that will attract more GST but unless your income has magically increased by the same amount, which it clearly hasn’t, you’re spending less on other things in the economy.”

He said the support plan made sense because the government wanted it to be timely and targeted.

“The fact that it can come in so quickly, and probably most importantly for the government politically, is that you see direct money in your account rather than having to wait for a cashback or not noticing that it’s come off your headline tax figure or something. That’s useful. And I think also the government has been quite clear that it was going to be limited.

“It highlights that for the government, they can’t control what’s happening across the world.

“And emitting a whole bunch of tax money they don’t have anyway, and therefore having to borrow for it to fund much wider support, would be a fairly reckless economic decision. This one coming from within the current operating allowance has kicked something else that the government might have done at budget time out and put this in instead. That seems to be a reasonable swap.

“The fact that it is targeted towards those who are already getting something like the in-work tax credit, does seem to be a pretty reasonable way to try and tightly target as much as possible the support and just get it out the door.”

Gunson said the winter energy payment should be increased.

“At the moment it’s about $20 a week for single parents and $31 a week for couples and people with children. That needs to go up irrespective of the current crisis that’s going on.

“We’d like to see the government lift it by at least 30 percent to make up for inflation as well as the current crisis to really help low-income families receiving a core benefit out.”

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Source: Radio New Zealand

McCain has announced it will close its Hastings vegetable processing plant by January 2027.

In a letter to growers, McCain said it reviewed operations at the site but was unable to find a sustainable pathway under the current model.

“The closure follows a review of our Hastings operations, which considered a range of options to strengthen the long-term position of the site.

“Despite meaningful effort, we were unable to identify a sustainable pathway under the current model. As a result, we will transition to sourcing vegetable products through trusted supply partners within our broader network.”

It’s not clear how many workers at the plant and growers this will affect.

McCain said it will honour all existing contractual commitments through the current season.

“Production at Hastings will continue through the remainder of the processing and packing season as planned.

“We recognise that this decision may have implications for future growing seasons and we are committed to working with you directly to discuss what this means for your individual circumstances.”

It said the company’s agriculture team would be in contact with growers to ensure they have clarity and support as we move through this transition.

It comes as Watties proposes to stop all production of frozen vegetable lines in New Zealand, affecting 220 growers in Canterbury.

Consultation on the Watties proposal closes on Wednesday.

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Source: Radio New Zealand

• RBNZ governor says NZ is likely to see higher short-term inflation
• Rates could rise if there are effects on medium-term inflation or inflation expectations
• Economic growth likely to be dampened

The Reserve Bank governor is warning of higher inflation and weaker economic growth due to the Middle East crisis.

The Israel and United States-led war against Iran has sent global energy prices soaring due to the closure of the Strait of Hormuz, and attacks on key energy infrastructure in the Gulf.

Economists had already warned of the inflationary impact facing the New Zealand economy.

In speech notes published on Tuesday, Reserve Bank (RBNZ) governor Dr Anna Breman echoed that sentiment.

“We are likely to see higher headline inflation over the near term, and somewhat weaker growth momentum,” Breman said.

Annual inflation was at 3.1 percent in the December quarter, above the RBNZ’s 1-3 percent target band.

The remarks come two weeks ahead of the RBNZ’s next monetary policy decision, where the Official Cash Rate is expected to remain on hold.

“A short-lived disruption and a temporary increase in petrol prices can – and should – be looked through from a monetary policy perspective if it is unlikely to have an impact on medium-term inflation outcomes,” Breman said.

“For this type of disruption, we would likely see higher inflation over the next few quarters, along with squeezed real incomes and demand.”

She said the peak impact of monetary policy on inflation took about six to nine quarters.

“So, tightening monetary policy in response to a short-lived disruption would only dampen growth without materially improving near-term inflation outcomes,” Breman said.

“If there are effects on medium-term inflation or inflation expectations, the appropriate policy response could be to increase interest rates to prevent these second round effects.”

Breman said “it is critical” for monetary policy to be forward-looking and focused on medium-term inflation pressures.

She said global supply chains were feeling the effects of the conflict, and it “will take time for the full effects of this shock on the global economy to play out”.

“We should try to avoid reacting too early to near-term inflation pressures that monetary policy can do little about – or reacting too late if above-target inflation becomes embedded in the economy.”

High near-term inflation, weaker growth

Breman said the higher short-term inflation spike would primarily be driven by higher petrol and diesel prices, which made up about 4 percent of the Consumer Price Index.

Higher fertiliser prices were another factor, and she believed it could take up to nine months to fully pass through to supermarket prices.

“Autumn fertiliser requirements are already on-hand in New Zealand, and fertiliser imports usually decrease over the winter months,” Dr Breman said.

“We expect fertiliser use to pick up for spring planting, which is when we may see more direct impacts on farms.”

Breman said the conflict meant New Zealand’s economic growth momentum would be “somewhat weaker” than the RBNZ’s previous assessments.

The bank’s February Monetary Policy Statement published forecasts of GDP growth of 1.1 percent in the March quarter, and 0.5 percent in the June quarter.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Air New Zealand says four return flights to Samoa for April and May have been cancelled because of rising fuel costs.

The cancellations are part of scheduled changes that the airline had announced at the start of this month.

Air New Zealand said it had nine services to Samoa each week and described the change as “minimal”.

It said like other airlines it was dealing with unprecedented volatility with jet fuel prices due to the conflict in the Middle East and was adjusting schedules to manage the impact.

Air New Zealand earlier said that it would cancel around 1100 flights from early March through until early May, but that most passengers would be moved to flights on the same day.

‘We might need to be careful with that jet fuel’ as supplies reduce

Airlines are pleading for assurance from the government, as the supply of jet fuel could be limited due to the conflict in the Middle East.

Board of Airline Representatives chief executive Cath O’Brien told Morning Report that New Zealand is a known as a “fuel risk destination”.

New Zealand had a history of experiencing issues with jet fuel allocation, she said.

“We saw that in 2017. We had the pipeline rupture. We saw it in 2022 and 2023 when we had insufficient jet fuel imported into the country.”

She was concerned that there had been no information, as suppliers could give 12 hours notice of rationing but airlines could not respond in the same way as usual because if there was limited jet fuel in New Zealand, the same would apply elsewhere.

“If we knew how a scarce resource of jet fuel might be managed, then we would be able to say how airlines might respond and whether that jet fuel is allocated more or less to long haul, or short haul, or freighters, or licensed flights, or regional services.

“At the moment, we’re kind of operating in this dearth of information.”

However, O’Brien said airlines were comfortable that there was currently a sufficient fuel supply, and could continue their usual operations.

“If we get to a point, as we have in the past in New Zealand, where jet fuel is 10 days away from arriving and we have a limited amount to get us through, then we might need to be careful with that jet fuel that we have as we wait for the next shipment.

“I think that’s increasingly likely as an outcome of the conflict up in the Middle East … so we need to know how we will manage that delay.”

Meanwhile, regional airlines are warning key air links are under growing pressure due to the rising fuel prices and operating costs.

Originair is poised to scrap its Wellington to Westport route, while Air Chathams has introduced a $20 fuel surcharge per ticket.

Barrier Air chief executive Grant Bacon said fuel price rises so far equated to about $15 extra per person on an average Wellington to Tākaka Golden Bay Air flight.

Reuters reports that jet fuel prices have soared from US$85-90 per barrel to US$150-200 per barrel in recent days leading to a number of airlines including Air New Zealand increasing fuel surcharges.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand