Lessons from COVID Response to Navigate Fuel Shortages in New Zealand

How can lessons from the COVID Response help navigate fuel shortages?

Thank you, Matthew, and thank you all for being here this morning.

I’d like to speak plainly to you about the event affecting every part of business right now. I’d like to cast it through another lens we try not to think about, let alone see the world through.

Current situation There is no point pretending this conflict in Iran is abstract or somebody else’s problem. As soon as the waterway that carries around one-fifth of global petroleum liquids consumption is thrown into uncertainty it becomes real for an isolated island nation like ours. Insurance costs, supply chains, energy markets, all the bills businesses pay, and the prices families see at the pump are all affected.

Right now we have sufficient fuel stocks in New Zealand and we are working hard across diplomatic, commercial, and industry channels to ensure that remains the case.

Here are the facts: Our national fuel stocks continue to be robust across petrol, diesel, and jet fuel.

Latest projections show that New Zealand has 59.3 days of petrol supply, 54.5 days of diesel supply, and 50.4 days of jet fuel supply available nationally. We have five ships expected to arrive in coming days and another ten ships a few weeks away.

Last week we announced a fuel plan detailing the planning in place for if this situation worsens. Introducing restrictions on fuel use is NOT the plan, but it is better to have a plan you don't use than get caught with no plan at all.

Plan A is to keep working with energy companies and foreign governments to ensure supply keeps up. The supply-side comes first. So far, the available days of supply has bounced around, and people have argued over which ships to count, but supply has stayed over six weeks' worth for the last three weeks. Our first goal is to keep it that way.

If, and only if, there is a risk of running out, would we go to demand-side restrictions.

Finer details of the plan are still being worked on. Government departments are talking to people in different industries every day to work out how the plan could work if it came to that.

There are still details to come, we are continuing to work on it and will give updates as soon as possible.

However, for now, we have enough supply, and our aim is to use the supply side to keep it that way.

Five lessons from the COVID response Nobody wants to relive COVID, but that period had many lessons if we want to learn them. We’d be mad to ignore a live experiment in politics and policy during a scary global situation.

I spent those years in opposition, but I half joked that I wanted to be the ‘leader of the proposition.’ During that time we didn’t just criticise the Government, as was our party’s constitutional role, we also put up a series of papers about how we’d do it better.

Today we face another event that is global, could be scary, and has already invoked a response from Government. What a time to dust off some of those reflections from that time.

Avoid the time trap The first and most important lesson was not to let the situation warp time. During COVID the Government slowed down time. The daily press conferences made 24 hours seem like a year, and the first 24 minutes we spent waiting to hear the day’s figures felt like a month.

We forgot that New Zealand would outlive the pandemic, and our country would have a big future, but decisions made then would cast a long shadow on that future.

The fiscal situation was the most obvious time warp victim. The figures were eye watering. The Government borrowed a net $100 billion in the four years from June 2019 to June 2023.

That’s why the financial support announced to date is: Targeted, at low-income working households with children Timely, it can be done with existing tax credits rather than creating a new mechanism Temporary, it will end in either a year or when regular petrol falls below $3, linking it to the problem Funded, it comes from within the allowance announced in the December Budget Policy Statement, so it will require savings elsewhere instead of new spending The time trap lesson also puts a stark lens on some of the other proposals being put about. We’re told we should cancel excise taxes or road user charges, cancel road projects, or enable online learning.

These ideas would all have long tails of effects that we cannot ignore.

Balancing human needs Do it with, not to the people Remember we’re all human, all New Zealanders Learn from the world, and don’t reinvent the wheel Education points to the second COVID lesson. We need to keep all of New Zealanders’ goals in perspective. I am still astonished at how quickly education was glossed over.

In many ways, education is the only investment that matters. Thoughtful people can solve lots of problems. Unthinking people can cause lots of problems. How educated the population is will trump any other variable across a generation. But, in the COVID time trap we abandoned it.

Last week I was asked countless times whether I thought students should be learning from home because of the fuel crisis. I said of course not, because we cannot afford to put education back at the bottom of the totem pole after working so hard to get students back at school. And I wondered, as I was being asked that question, whether attendance had actually fallen significantly. It hadn’t. We know that because we’ve made daily attendance data available online.

In response to a crisis, you have to think about all human priorities and you have to follow the facts. That’s why education, for one thing, is not going to be sacrificed in the event this Government needs to move to demand-side rationing.

The third lesson was to work with, rather than against people.  The COVID response took on its own momentum. By the end of 2021, we’d been in a state of crisis management for 18 months. The then Prime Minister’s nearly belligerent refrain ‘if you want to do x, y, or z, get vaccinated,’ confirmed she had gone too far.

But vaccination was only the most infamous flashpoint. Many others felt the response was being done to rather than with them.

There was the school that had its Australian approved RAT tests confiscated, how dare they, take initiative?!

There were the Auckland restaurants who were told one morning they could open for the America’s Cup that day. They had to explain that they were very grateful but to serve lunch they needed to roster staff and order food the night before, at least.

There were the hairdressers and event promoters who showed they could operate as safely as very similar industries, but found deaf ears and frustration.

That’s why the Government has been working double time behind the scenes to do two things: Keep fuel supply up and be ready to manage demand as a last resort.

There are extensive discussions with businesses of every sector about how those steps are or would be taken. Rather than jumping to the podium, we are quietly making plans we hope to never use.

The Red Tape Tipline We’re not only working with business and community to help solve problems we know about, we’re open to hearing new solutions altogether.

For all the briefings we get from officials – in fact I’d be at one right now if I wasn’t here - there will also be businesses on the frontline who are experiencing the strain firsthand and experiencing what is going on before a government department has figured it out.

If we’re learning lessons from our COVID approach, we might as well do the same from other countries. Taiwan implemented an approach during the COVID outbreak where they went ‘this is a tough time for everyone, since you’re the ones dealing with it every day, what do you need us to do to help?’. Through public feedback they were able to develop tools that improved their response, with apps that helped with contact tracing and collated data.

That’s why I’m also encouraging businesses to come directly to the Ministry for Regulation with areas we can relax regulations and support the response.

In a disruption, every unnecessary delay matters. If there are rules, forms, approvals, or compliance requirements that make it harder to import, store, distribute, or use fuel efficiently, those issues should be identified now, not when the pressure is at its peak.

People can submit examples of regulations that could be reviewed, suspended, simplified, or better coordinated to support New Zealand’s fuel resilience via the red tape tipline.

This could include barriers affecting fuel transport, storage, distribution, local delivery, freight movements, business operations, or the ability of firms to adapt quickly to changing supply conditions.

The tipline has already fixed many things that matter to Kiwis, whether it’s allowing them to build sheds on their property, fixing scaffolding regulations and ending prohibition on medical conferences taking place.

Already there’s been more than 75 submissions, with some very interesting ideas. These are currently being analysed to see which amount to the most common-sense changes and will be able to have the most tangible impact on our response. I’ll have more to say on that soon.

We are lucky to have democracy and due process. They give each person the dignity of being seen and heard. The COVID response was a lesson in what not to do.

The closure of Parliament can be debated. Other countries closed more, our still functioned online at times, but there was something else I think we should worry about.

People accepted the suspension of democracy and the rule of law so easily. When the Police Commissioner said the police would follow people around and perhaps ‘take them to our place’ without any actual law to enforce, people shrugged. When the Leader of the Opposition couldn’t get to Parliament, too many people including the media shrugged again.

It’s essential that any possible restrictions on normal life are done clearly and transparently, with no short cuts on democracy or due process. That matters in a fuel crisis just as much as it did in COVID, because any move to ration demand or limit normal activity will touch millions of ordinary New Zealanders. If people are being asked to change how they live, they are entitled to know the rules, the reasons, and the legal basis for them.

Otherwise, you risk ignoring the fourth lesson, and people feel they haven’t been listened to. That’s when you get riots on the lawns of Parliament.

New Zealanders during COVID could be forgiven for thinking we were the only country on earth. Everything had to be done our way, as if it was being done for the first time.

Those Aussie-approved thermometers being confiscated was a good example. Today we’ve already harmonised fuel standards with Australia, in stark contrast to that approach.

Like COVID, our isolation is a big factor in the current fuel situation. Then, we had several weeks’ notice as each variant crawled across the globe. Today, we’re tracing back ships coming to Marsden Point from Korean and Singaporean refineries, and then the ships going to those refineries.

If we can see what’s coming, we can take time to prepare, and we can watch what others are doing to plan our own response. We should never be too proud to learn from another country. We’re pretty good, but we don’t have a monopoly on wisdom.

Why the response matters We can’t let today’s crisis erode our country’s future.

The latest Treasury figures put net core Crown debt at $191.4 billion. That alone is a reason to treat every new commitment seriously, because every dollar we borrow today is a dollar we lose the freedom to use tomorrow.

Fiscal discipline is what stops the first shock being followed by a second one. It is what helps contain inflation pressure. It is what protects interest rates from staying higher for longer. And it is what means that if genuine hardship support becomes necessary, government can provide it without making everything else worse.

So, when we say do not take your eye off the fiscals, we are not changing the subject.

You can already hear the other instinct from the opposition. More spending. More intervention. More borrowed relief. More politics built around the appearance of action. That’s what would be happening if the other lot were in charge for this.

With cool heads, we can respond to fuel shortages from the Iran war without committing the knee-jerk mistakes made during COVID.

It means understanding that our long-term future must not be eroded by short-term political theatrics. That is the approach we have to bring to this response.

We cannot prevent every external shock. But we can make sure New Zealand responds with fiscal discipline and common sense. That will be the evidence that we’ve learnt our lessons.

Thank you.