This opinion editorial by ALENZ Chair Nick Collins ran in the Sunday Star Times on 6 July 2025 – view here

The Coalition Government is unlikely to achieve their “going for growth” strategy without addressing New Zealand’s energy crisis.

Successive governments have failed to appreciate that energy is at the beating heart of our manufacturing sector, where electricity and gas are the blood that keep our furnaces hot and pulp digesters whirring.

But that energy lifeblood is now both scarce and exorbitantly priced – leaving the pulse of our economy faltering, and in some regions in arrhythmia.

In the last three years our members and other manufacturers have struggled to cope with energy costs that have increased over 100% – reducing production and mothballing plants because of a lack of gas at globally competitive pricing.

Manufacturers have struggled to get competitive pricing bids when nearing the end of their energy contracts, or had to delay investment in larger capacity production facilities because of a lack of certainty on energy at globally competitive prices.
New Zealand’s poor GDP per capita performance compared with advanced economies is well known, and the Government is making laudable attempts at trying to grow the pie.

But incentives like Investment Boost are unlikely to result in new investment in manufacturing plants that would grow output and increase productivity – manufacturers have suffered significant increases in energy costs over the past five years and are faced with little or no gas in the future and further escalating electricity costs.

They are stuck in a holding pattern waiting for the Government to act. They are struggling to grow and struggling to compete with goods from our major trading partners who enjoy stable energy supply, often at subsidised prices.

To successfully be going for growth, the Government needs to not just deliver on the electricity market review but ensure the future availability of affordable and resilient energy supply for all New Zealand.

Relying on the current strategy – hoping that rain will fill our lakes, hoping that commodity prices will remain high, hoping that new gas reserves will be found and hoping that the geopolitical situation remains stable to enable New Zealand to continue trading, is all a bit too much to hope for.

Our manufacturers are the muscle behind every dollar that pays for hospitals, schools and roads. They are bleeding competitive advantage through runaway energy costs – undermining not only today’s GDP but the ambitions of tomorrow: we can’t build data centres on a grid famous for its scarcity premiums.

We need the pulse of production to stay strong and steady for the decades of electrification ahead.

New Zealand’s economy can recover from recent arrhythmias – but ignore them any longer and you invite cardiac arrest.