“We’ve been briefed by Wrightson’s in terms of the agricultural sector that they’re fearful that a lot of the big grain growers who grow the corn are unwilling to make the investment because there’s no certainty as to what is going to be the price of energy needed to dry the corn in February and March – now that goes straight into agriculture, straight into food production,” Jones said.
“And then we’ve had overnight confirmation that Methanex is now engaging with its staff towards a substantial decrease, if not a closedown, of their business – so what other f***ing signs do you need?,” he said.
Energy Minister Simeon Brown said he had not heard any updates from Methanex on whether it would dial down production after October when it reopens its plants following a temporary shutdown.
Jones said New Zealand will see the “hollowing-out” of industry thanks to the fact that the country no longer enjoys internationally competitive power prices.
Jones told the Herald he had met with the Japanese ambassador Makoto Osawa who was accompanied by the managers of and owners of Japanese-owned industry in New Zealand, mainly Oji Fibre, which owns the likes of the Kinleith mill in Taranaki, and other plants round the country. The embassy was approached for comment.
Jones said he was told by those firms: “We can’t stay in New Zealand if energy is not competitive internationally”.
He said the departure of these firms would lead to a disindustrialised version of rural New Zealand that he found “repugnant” and warned that it would lead to the loss of export revenues, which would have broader impacts on the New Zealand economy by making imports more expensive.
“Without the export dollars, we’re going to have [ongoing] current account dramas and we’ll have a balance of payment challenge,” Jones said.
Winstone Pulp had attempted to negotiate a deal with energy supplier Mercury and Government ministers. It is unclear what this deal might have involved and whether the firm asked for payments or subsidised power until a more lasting solution could be found.
Winstone Pulp chief executive Mike Ryan told 1News the recent drop in electricity prices was not enough to help the company.
“The nature of our operations means we need competitive pricing to be sustained over a long period, we cannot work around short-term price dips in the market,” Ryan said.
“Even though current spot pricing has fallen significantly from the August highs, current electricity futures pricing indicates that nothing is going to materially change in the medium-term regarding wholesale market electricity pricing,” he said.
There appear to have been different views among the coalition partners on whether to use the Government’s balance sheet to sustain the mills until a longer-term solution could be found – and with new generation taking years to generate electricity, it could be some time before the market becomes competitive.
Social Development Minister Louise Upston told RNZ that it “wasn’t felt that we could make a difference in this case”.
“Unfortunately the Government isn’t in a position to step in and save every business, including this one,” she said.
Act leader David Seymour said that “no matter how much your heart tells you you should [prop up a business] your head reminds you that actually you can’t do it - you’re just delaying the change”.
Jones would not say what stance NZ First had taken, but said the party should be judged “on the record”, noting that you could say the party had been “interventionist”.
Jones said he was working with Brown on a sector review. He promised the review would not be captured by the sector, who he alleged too often made excuses for poor performance.
“I’m sick to death of all these sort of shaggy dog corporate tales,” Jones said.
“[The gentailers] had an opportunity. This problem just didn’t arise in 2023, arguably it didn’t arise in 2017 [with the election of the Government that banned new offshore oil and gas exploration], it’s a slow-burning fuse.
“Cabinet has delegated to Simeon and myself to build some robust criteria with the appropriate personnel. I don’t want any consultants who are tainted by the fact that they’re insiders within the New Zealand power sector.
“This now goes beyond the palace politics of the power sector. This is striking at the political economy equation of New Zealand: Are we able in our regions to sustain businesses in the absence of adequate gas or in the absence of affordable energy?”
Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
