Hughes Gareth: Financial Review Debate — In Committee 
Hughes Gareth: Financial Review Debate — In Committee 
[Volume:671;Page:17464] 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chair. I wonder how many Government MPs were boy scouts or girl scouts when growing up. I wonder because if they were they have forgotten the Scout motto “Be prepared.” When it comes to New Zealand’s vulnerability stemming from its dependence on oil we are as unprepared as we could be. 
Oil is the lifeblood of the modern economy. We are so dependent on oil that when prices seriously fluctuate or rise as seen in the previous oil shocks of 1973 1979 1990 and 2008 those fluctuations have preceded global recessions. Morgan Stanley says that sharp increases in global oil prices pose the biggest threat to the global economy and in New Zealand we are particularly vulnerable. A parliamentary report entitled “The next oil shock?” found that as a country we are reliant on oil imports and heavily dependent on cheap oil for our major sources of income. 
New Zealand is highly exposed to oil shocks. I recently released research showing that every US$1 price rise in a barrel of oil wipes out between $40 million and $60 million from New Zealand’s annual gross domestic product and destroys between $22 million and $33 million in household spending. Oil is pervasive and is in everything from fertiliser to food to furniture. New Zealand is particularly vulnerable because of our transport sector which is 99 percent dependent on oil. In total oil makes up over 30 percent of our nation’s imports. 
Right now we are just a few cents shy of the highest petrol prices in our country’s history. People are feeling the pain at the pump. The last time petrol was over $2 a litre in New Zealand thousands of people switched to public transport in their droves but they found public transport lacking. In Wellington the sector literally went to the museum to pull carriages out of retirement to deal with the capacity crisis. So in facing another period of volatile and increasing price pressures is our Government prepared? In the absence of a national plan I asked the Minister of Finance whether he would finally support an inquiry into how New Zealand can best prepare its economy for the effects of high oil prices. His response was “Probably not.” 
New Zealand is one of the few countries with no modern strategy to deal with oil price shocks. Last year the Government turned down a Green Party request for an inquiry that was made at the Finance and Expenditure Committee. Less than a month ago the UK Government released its carbon action plan which has more than 130 actions to reduce emissions and that country’s dependence on oil. Yet New Zealand an internationally outlying country is unprepared and is relying on the “She’ll be right.” attitude. In short the Government has no plan and no plan to start planning to reduce our dependency on oil. 
The Minister of Finance believes that the best strategy is for people to see the price signals and change their behaviour accordingly. I ask how people can have a real alternative to paying more to fill their car like cycling more when we lack safer cycling facilities. How will someone near the now-closing Muri railway station north of Wellington change their driving commute and catch the train when their station closes? How will an East Coast logging company transport logs to the port on anything other than trucks when their rail line closes? Without a clear plan people lack alternatives to respond to those market signals and on the flip side the Government has a plan to increase New Zealand’s dependency on oil and vulnerability. The Government still intends to invest some $10 billion on motorways further locking us into a car and oil-dependent future and increasing our national emissions. The Government is idly standing by as New Zealand looks set to lose four regional rail lines from a sudden desire to extract a profit from the lines which have faced decades of asset-stripping and under-investment. 
We have asked the New Zealand Transport Agency what oil price assumptions were used in its latest models for the roads of national significance. We found that oil was not even factored in at all. It is irresponsible as petrol hits over $2 a litre that the Government still has its head in the sand on the role of oil prices in its transport planning. The responsible solution to reducing our vulnerability is an inquiry leading to a strategy and the redirection of funding to public transport infrastructure like the Auckland CBD rail loop or a light rail link for Wellington and better walking and cycling options. We need to protect our economy by decoupling the economy from its addiction to oil. We are a resilient innovative can-do nation. Let us take a leaf from the Scouts and be prepared. 
Report noted.