Latest / Best of Business / Catherine Beard: Business NZ Advocacy Director on the Government's loan scheme to help businesses transition from natural gas

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Catherine Beard: Business NZ Advocacy Director on the Government's loan scheme to help businesses transition from natural gas · Best of Business

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• 0:16
  Speaker 2: Government stepping into guarante all bank loans to get the
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  Speaker 2: profitable businesses off gas.
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  Speaker 3: Spaghetti Fund was hundreds of millions of dollars handed out
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  Speaker 3: willy nilly at the behest of a minister. This is
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  Speaker 3: commercial banks determining who is credit worthy and making loans
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  Speaker 3: so that firms can invest their own money in the transition.
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  Speaker 2: So this is how it works. Government underwrites eighty percent
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  Speaker 2: of the loan banks can offer cheaper rates individual loans
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  Speaker 2: being capped at fifty million. Taxpayers exposure is max fifty
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  Speaker 2: million for bad debts. Catherine Baird Business and Z Catherine,
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  Speaker 2: good morning, Good morning. What rates were the banks offering
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  Speaker 2: for this kind of work to be done then, versus
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  Speaker 2: what do we think that a business will be charged
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  Speaker 2: after this intervention?
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  Speaker 4: Do you know, Oh gosh, that's a tough question. It's
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  Speaker 4: probably going to depend on the bank. I'd say there'd
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  Speaker 4: be more than one bank involved in this, but the
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  Speaker 4: aim should be for it to be considerably more affordable
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  Speaker 4: than it would have been otherwise. And we think this
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  Speaker 4: is very necessary because there's probably a whole lot of
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  Speaker 4: businesses that could actually get a lower energy cost if
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  Speaker 4: they went to something like an electric heat pump. But
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  Speaker 4: the barrier is the capital expenditure. And so we're very
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  Speaker 4: much in favor of helping business to get over that
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  Speaker 4: that hump my costion and they've got to pay it back.
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  Speaker 2: They've got to pay back. But my question in Catherine
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  Speaker 2: is we have a solid we're told solid and sound
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  Speaker 2: banking system in New Zealand. If we have a profitable business,
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  Speaker 2: a profitable business who's got a long term relationship with
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  Speaker 2: the bank, and they go to the bank and they
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  Speaker 2: say I need some money to lower the capital expenditure,
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  Speaker 2: to lower the cost of my inputs and secure my business.
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  Speaker 2: Why would a bank say no, or why would the
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  Speaker 2: cost be so prohibitive it couldn't be done.
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  Speaker 4: Look, I think there's an element of uncertainty there for
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  Speaker 4: businesses in terms of does the business case stack up
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  Speaker 4: to do it under normal learn loan circumstances, and also
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  Speaker 4: what's the future look like, so you know, what are
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  Speaker 4: my alternatives? And part of the package here is some
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  Speaker 4: more funding for ECA to lean into businesses help them
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  Speaker 4: with the business case help them look at the long
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  Speaker 4: term future viability of their business. So, are there cheaper
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  Speaker 4: fuel options out there? What would they need to do
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  Speaker 4: to actually, you know, move through that. I think for businesses,
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  Speaker 4: there's been short term contracts, has been concerned about the
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  Speaker 4: availability of gas. The price has obviously gone up, and
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  Speaker 4: you know, we've already seen quite big businesses closed down
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  Speaker 4: and energy has been part of the problem.
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  Speaker 2: Absolutely, Catherine, No one arguing with that. Catherine Beard, Business
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  Speaker 2: and z Nice TV on the show this morning.
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