October 3, 2018

NZ CEOs say Government jumped the gun on oil and gas ban

Published on nzherald.co.nz

3 Oct, 2018 5:00am

The Coalition Government’s “oil and gas ban” provoked a strong response from CEOs, many saying it contributed to the downturn in business confidence.

Some 77 per cent of respondents to the 2018 Mood of the Boardroom survey agreed the Government should have waited until the Productivity Commission set out its pathway to a low emissions future and taken that advice on board before making a decision.

While CEOs acknowledge the nature of the decision would have been unpopular with some whenever and however it was done, they describe the decision as “egregious” and “naive” for its urgency and suddenness.

A residential construction boss says it had contributed to the lack of confidence business has in the Government: “The absence of consultation on this issue and the manner in which it was announced was frankly bizarre. I suspect a lot of the concerns larger businesses have around Government policy direction stem from this single decision.”

The ban on new offshore oil and gas exploration was jointly announced in April by Prime Minister Jacinda Ardern, Regional Economic Development Minister Shane Jones and Climate Change Minister James Shaw.

The Crown Minerals (Petroleum) Amendment Bill took the industry by surprise — largely as it was not part of a confidence and supply or coalition agreement, had not been explicitly promised by Labour during the election campaign, and was announced without being robustly contested through Cabinet consideration.

Chen Palmer’s Mai Chen says the Government can do what it wants to do, but the way it did it wasn’t ideal. “This affected business confidence, and they are now having to unspook business that the same approach will not be taken to other industries.”

“Moving too quickly has created uncertainty over future energy sources. Change without a transition plan risks unintended negative consequences,” says an infrastructure advisory firm boss.

A CEO from the entertainment industry suggests waiting might have enabled the Government to provide greater substantiation: “The decision to do something in itself is to be commended, but it might have had greater support if the process had been better.”

Support for the decision — but not the process — shone through from some of respondents, with suggestions that it could provide an opportunity for New Zealand.

Fifteen per cent of respondents believed the Government was right to move when it did; 8 per cent were unsure.

“New Zealand is well-placed to develop alternative technologies for renewable replacement of fossil fuels — and without tension, this will never occur,” says Wellington Energy CEO Greg Skelton. “The scarcity of local fossil fuel will drive the required innovation and set New Zealand up as an international leader in this area.”

A boss in the marketing industry feels that 40 years, with current licenses still to be executed, provides enough time to adjust.

“A clear signal was needed to the industry to look at what they do now and plan to change, rather than carrying on as in the past.”