1 00:00:00,080 --> 00:00:02,960 Speaker 1: To the unenviable position the government finds itself in with 2 00:00:02,960 --> 00:00:05,440 Speaker 1: epic fury putting petrol through the roof and potentially seeing 3 00:00:05,440 --> 00:00:08,480 Speaker 1: an economy hammered through inflation, or witcof could cut a 4 00:00:08,520 --> 00:00:10,280 Speaker 1: deal and it's all sort of by next week. Anyway, 5 00:00:10,360 --> 00:00:12,760 Speaker 1: one hundred and forty three thousand families get fifty dollars 6 00:00:12,760 --> 00:00:14,840 Speaker 1: the bill. Three hundred and seventy three million comes from 7 00:00:14,840 --> 00:00:16,960 Speaker 1: the operating budget, which means at least we don't borrow 8 00:00:17,040 --> 00:00:19,840 Speaker 1: yet more money. Nikola Willis, Finance Minister, is with us. 9 00:00:19,880 --> 00:00:23,840 Speaker 2: Good morning, Good morning, Mike. Excuse my slightly clerky. 10 00:00:23,640 --> 00:00:25,800 Speaker 1: Voice, No worries. You've been out partying again. You've got 11 00:00:25,800 --> 00:00:29,200 Speaker 1: to tone it down in difficult times. No, it's just 12 00:00:29,240 --> 00:00:31,360 Speaker 1: a frog in the throat, rock in a hard place. 13 00:00:32,400 --> 00:00:36,160 Speaker 2: Yeah, we are because the country used its rainy day 14 00:00:36,200 --> 00:00:39,600 Speaker 2: fund and then some during COVID wrapped up the debt 15 00:00:40,320 --> 00:00:42,080 Speaker 2: and we're not in a position as a country to 16 00:00:42,080 --> 00:00:44,839 Speaker 2: go on another splurge. So what that means is we 17 00:00:44,880 --> 00:00:47,360 Speaker 2: need to be very responsible about the way we support 18 00:00:47,360 --> 00:00:50,600 Speaker 2: New Zealanders through this crisis. We need to first not 19 00:00:50,720 --> 00:00:54,320 Speaker 2: add heaps more pressure to inflation through a big spender. Second, 20 00:00:54,440 --> 00:00:57,560 Speaker 2: actually preserve our position for the future by not racking 21 00:00:57,600 --> 00:01:00,440 Speaker 2: up exsy step and all of the advice is, if 22 00:01:00,480 --> 00:01:03,120 Speaker 2: you're going to do this sensibly, make sure any support 23 00:01:03,240 --> 00:01:07,120 Speaker 2: is temporary, it's highly targeted, and it is timely. So 24 00:01:07,200 --> 00:01:10,400 Speaker 2: the announcement that we made yesterday meets those tests. 25 00:01:10,680 --> 00:01:12,800 Speaker 1: Do you worry you might have pulled the trigger too 26 00:01:12,800 --> 00:01:15,240 Speaker 1: early if a deal struck within the next week, Have 27 00:01:15,319 --> 00:01:17,520 Speaker 1: you gone too soon and wasted money in time? 28 00:01:18,400 --> 00:01:21,600 Speaker 2: No, because we've given ourselves a clear exit ramp. If 29 00:01:21,720 --> 00:01:24,480 Speaker 2: the price of ninety one goes under three dollars for 30 00:01:24,600 --> 00:01:27,240 Speaker 2: four weeks or more, we've said at that point we 31 00:01:27,319 --> 00:01:31,479 Speaker 2: would stop this additional support. So it's whichever comes sooner 32 00:01:31,680 --> 00:01:35,600 Speaker 2: that or one year being the maximum time for the payment. 33 00:01:35,720 --> 00:01:37,840 Speaker 2: So we've given ourselves a clear exit ramp. And we're 34 00:01:37,840 --> 00:01:41,160 Speaker 2: conscious that for those low to middle income families that 35 00:01:41,200 --> 00:01:45,319 Speaker 2: we're targeting, their petrol bills have already gone up thirty 36 00:01:45,400 --> 00:01:48,320 Speaker 2: or forty dollars more each time they fill up the tank. 37 00:01:50,280 --> 00:01:54,000 Speaker 1: You don't actually know that the so called families you're targeting, 38 00:01:54,480 --> 00:01:56,880 Speaker 1: you don't know what they drive. If the family is 39 00:01:56,960 --> 00:01:59,040 Speaker 1: driving an ev their petro bill hasn't gone up at all, 40 00:01:59,040 --> 00:02:01,040 Speaker 1: if that family walks, it hasn't gone up at all. 41 00:02:01,080 --> 00:02:03,280 Speaker 1: The person driving the economy is running the diesel and 42 00:02:03,280 --> 00:02:04,160 Speaker 1: you gave them nothing. 43 00:02:05,400 --> 00:02:08,560 Speaker 2: Well, you are right that those family circumstances will vary. 44 00:02:08,639 --> 00:02:12,400 Speaker 2: But regardless of their circumstances, they will be facing increasing costs, 45 00:02:12,440 --> 00:02:15,119 Speaker 2: and many of them will be car users, and many 46 00:02:15,160 --> 00:02:17,960 Speaker 2: of them will experience other price pressures. In terms of 47 00:02:18,040 --> 00:02:21,680 Speaker 2: diesel users, Yes, we are very conscious that diesel prices 48 00:02:21,680 --> 00:02:25,920 Speaker 2: have gone up massively. They're a huge input for our agricultural, manufacturing, 49 00:02:25,960 --> 00:02:29,280 Speaker 2: industrial industries. The challenge we have there, Mike, is our 50 00:02:29,400 --> 00:02:31,840 Speaker 2: number one goal is to make sure those industries have 51 00:02:32,040 --> 00:02:34,840 Speaker 2: enough diesel to keep going, because that's what would do 52 00:02:34,880 --> 00:02:36,880 Speaker 2: the most harm to the economy in terms of jobs 53 00:02:36,880 --> 00:02:39,160 Speaker 2: and incomes. And so it would be wrong for us 54 00:02:39,200 --> 00:02:42,360 Speaker 2: to be sending a price signaled out now by reducing 55 00:02:42,400 --> 00:02:45,800 Speaker 2: the price of diesel, when actually in future, if west 56 00:02:45,800 --> 00:02:48,760 Speaker 2: Cast scenarios played out, we might be having to preserve 57 00:02:48,880 --> 00:02:51,919 Speaker 2: our supply of diesel. So that's what we're very focused on. 58 00:02:52,120 --> 00:02:54,560 Speaker 1: The reason I ask those questions, I just wonder I'm 59 00:02:54,600 --> 00:02:57,760 Speaker 1: convinced this things over sooner rather than later, And this 60 00:02:57,880 --> 00:03:02,440 Speaker 1: is just it's just line, and the government can't come 61 00:03:02,480 --> 00:03:06,040 Speaker 1: to wipe everybody's bum after three short weeks when everyone's 62 00:03:06,160 --> 00:03:08,079 Speaker 1: whining and well. 63 00:03:07,960 --> 00:03:11,720 Speaker 2: I agree, ok I agree with you on that that 64 00:03:11,720 --> 00:03:14,079 Speaker 2: the government isn't going to be able to wipe out 65 00:03:14,160 --> 00:03:16,640 Speaker 2: all of the pain. I wish we could, that we 66 00:03:16,680 --> 00:03:19,840 Speaker 2: can't do so responsibly without putting New Zealanders in a 67 00:03:19,919 --> 00:03:23,120 Speaker 2: much worse position in future. But on the former as 68 00:03:23,120 --> 00:03:26,120 Speaker 2: to whether or not this will be resolved quickly, I'm 69 00:03:26,160 --> 00:03:28,440 Speaker 2: afraid that it's my job to look at a range 70 00:03:28,440 --> 00:03:31,240 Speaker 2: of scenarios, and there are many scenarios in which not 71 00:03:31,280 --> 00:03:35,320 Speaker 2: only might this conflict be prolonged, but also the supply 72 00:03:35,520 --> 00:03:39,640 Speaker 2: chain disruption that has caused prices to rise will linger 73 00:03:39,760 --> 00:03:43,000 Speaker 2: for some time. That is the advice I'm getting. And 74 00:03:43,040 --> 00:03:46,119 Speaker 2: when you look at all of the international reporting, even 75 00:03:46,120 --> 00:03:47,680 Speaker 2: if you think peace is going to break out in 76 00:03:47,720 --> 00:03:50,520 Speaker 2: the Middle East tomorrow, people are acknowledging that the strait 77 00:03:50,560 --> 00:03:53,000 Speaker 2: of hall Moves may be disrupted them some time. Oil 78 00:03:53,040 --> 00:03:57,440 Speaker 2: refineries have been disrupted, even oil and gas fields have 79 00:03:57,520 --> 00:03:59,760 Speaker 2: been disrupted, So that is going to have lingering effets. 80 00:04:00,000 --> 00:04:04,240 Speaker 1: Okay, I get it. Any update from Luxan with his 81 00:04:04,320 --> 00:04:07,440 Speaker 1: calls with Malaysia career and Wong they're looking. I'm assuming 82 00:04:07,440 --> 00:04:10,840 Speaker 1: it alternative feed sources like places like America. Is their 83 00:04:10,920 --> 00:04:11,680 Speaker 1: hope there or not. 84 00:04:13,040 --> 00:04:16,200 Speaker 2: Yes, he has had calls with both the Malaysian and 85 00:04:16,400 --> 00:04:19,719 Speaker 2: Korean leaders, and I will leave him to do a 86 00:04:19,720 --> 00:04:22,320 Speaker 2: diplomatic readout of those. I've of course spoken to him 87 00:04:22,360 --> 00:04:25,479 Speaker 2: about them. Yes, Look, Malaysia is sourcing from a range 88 00:04:25,480 --> 00:04:30,000 Speaker 2: of places, including Canada and elsewhere. The Koreans are looking 89 00:04:30,839 --> 00:04:34,359 Speaker 2: to source feedstock from elsewhere, And what you're seeing is 90 00:04:34,360 --> 00:04:37,440 Speaker 2: a rearrangement in the back of the global oil market 91 00:04:37,480 --> 00:04:43,320 Speaker 2: where by the US, Canada others are suddenly becoming more 92 00:04:43,360 --> 00:04:46,839 Speaker 2: important for these Southeast Asian refineries who typically have relied 93 00:04:46,880 --> 00:04:48,719 Speaker 2: on the Middle East. So you are going to see 94 00:04:48,720 --> 00:04:51,359 Speaker 2: some big shifts there. But of course that means that 95 00:04:51,400 --> 00:04:54,600 Speaker 2: the price potentially remains high because you've got more people 96 00:04:54,680 --> 00:04:56,960 Speaker 2: competing for a smaller amount. 97 00:04:56,640 --> 00:05:01,039 Speaker 1: Of all Price isn't our biggest problem. Supply is fair, correct. 98 00:05:01,120 --> 00:05:04,080 Speaker 2: My number one focus is supply security. If we can 99 00:05:04,120 --> 00:05:06,840 Speaker 2: get it into the country, the economy keeps going. 100 00:05:06,839 --> 00:05:11,159 Speaker 1: And nothing yet post what we already know that's a 101 00:05:11,200 --> 00:05:13,560 Speaker 1: problem in terms of supply that you know of and 102 00:05:13,600 --> 00:05:14,880 Speaker 1: can report this morning. 103 00:05:15,360 --> 00:05:18,880 Speaker 2: No, because the fuel importers have not said to me, Look, 104 00:05:18,960 --> 00:05:20,520 Speaker 2: we don't think we're going to be able to get 105 00:05:20,520 --> 00:05:22,080 Speaker 2: our orders, and we don't think we're going to be 106 00:05:22,120 --> 00:05:25,960 Speaker 2: able to replace our orders. But it's really important that 107 00:05:26,000 --> 00:05:28,880 Speaker 2: we plan for that because they might not know that 108 00:05:29,000 --> 00:05:31,360 Speaker 2: until they suddenly get a force measure called on a 109 00:05:31,400 --> 00:05:34,160 Speaker 2: contract where the person that normally says, oh, look we 110 00:05:34,200 --> 00:05:36,280 Speaker 2: can't do it anymore because of global events, and then 111 00:05:36,320 --> 00:05:38,880 Speaker 2: they'll be in a scramble to get more. And so 112 00:05:38,960 --> 00:05:41,080 Speaker 2: I know that they're taking prudent steps to make sure 113 00:05:41,120 --> 00:05:43,599 Speaker 2: they've considered alternative sources of supply. But of course it 114 00:05:43,640 --> 00:05:47,520 Speaker 2: takes more time to get fuel from the other side 115 00:05:47,520 --> 00:05:49,160 Speaker 2: of the world than it does from Asia, so that 116 00:05:49,200 --> 00:05:52,159 Speaker 2: in itself could create some delays in our supply chain. 117 00:05:52,720 --> 00:05:55,120 Speaker 2: And there is a question in that scramble where that 118 00:05:55,600 --> 00:05:58,200 Speaker 2: anyone misses out. So those are the sorts of worst 119 00:05:58,240 --> 00:06:01,200 Speaker 2: case scenarios that we are having to plan for Bremen. 120 00:06:01,320 --> 00:06:05,080 Speaker 1: Three rate rises in election year, against stagflation, against an 121 00:06:05,080 --> 00:06:08,479 Speaker 1: economy going nowhere. How much funds that well? 122 00:06:08,520 --> 00:06:12,680 Speaker 2: I thought she made some very considered remarks yesterday. She 123 00:06:13,800 --> 00:06:16,880 Speaker 2: I think showed a real conviction about the inflation mandate, 124 00:06:16,880 --> 00:06:18,840 Speaker 2: which we need because actually that's the number one thing 125 00:06:18,880 --> 00:06:20,760 Speaker 2: we can do for New Zealander's cost of living is 126 00:06:20,880 --> 00:06:24,279 Speaker 2: keep inflation under control. But she was also realistic that 127 00:06:24,839 --> 00:06:28,040 Speaker 2: in response to an immediate supply shark, immediate interest rate 128 00:06:28,120 --> 00:06:30,800 Speaker 2: rises aren't going to sort that out. Actually, what she's 129 00:06:30,839 --> 00:06:34,120 Speaker 2: more focused on is the secondary and medium term effects 130 00:06:34,160 --> 00:06:37,479 Speaker 2: of if inflation expectations go higher and core inflation pizzin. 131 00:06:37,600 --> 00:06:41,359 Speaker 2: So that is absolutely textbook central banker stuff. And I 132 00:06:41,400 --> 00:06:43,360 Speaker 2: thought she was She communicated it well, all. 133 00:06:43,320 --> 00:06:45,640 Speaker 1: Right, nice to talk to you. Nichola Willis the Finance 134 00:06:45,680 --> 00:06:48,679 Speaker 1: Minister Philippines. By the way, state of national emergency. Marcos 135 00:06:48,720 --> 00:06:51,520 Speaker 1: has called this one signed and executive order remain in 136 00:06:51,560 --> 00:06:53,760 Speaker 1: place for a year. Imports ninety eight percent of the 137 00:06:53,760 --> 00:06:55,640 Speaker 1: crew comes from the Gulf. Of course, they've got forty 138 00:06:55,640 --> 00:06:58,880 Speaker 1: five days of fuel left. But of course, unlike us, 139 00:06:59,080 --> 00:07:01,760 Speaker 1: they heat their plate, they run their businesses with oil. 140 00:07:02,200 --> 00:07:04,039 Speaker 1: We at least in part, are renewable. 141 00:07:04,720 --> 00:07:07,640 Speaker 2: For more from the Mic Asking Breakfast, listen live to 142 00:07:07,720 --> 00:07:10,800 Speaker 2: news Talks at b from six am weekdays, or follow 143 00:07:10,840 --> 00:07:12,360 Speaker 2: the podcast on iHeartRadio.