Category: Public Media

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