Hughes Gareth: Estimates Debate — In Committee 
Text is incorporated into the Bound Volume 
Hughes Gareth: Estimates Debate — In Committee 
[Sitting date: 14 August 2012. Volume:682;Page:4365. Text is incorporated into the Bound Volume.] 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chair. Nga mihi nui ki a koutou. Kia ora. It is good to take a call on the estimates debate when it comes to energy. When you follow that contribution from the member Jonathan Young you see everything this Government is doing to support the industry. In this sector the Government is quite happy to pick winners. It is quite happy to throw taxpayers’ money at specific sectors. But what I want to look at in my speech is the economics. I think it is foolhardy it is short-sighted and it is not even in our economic interest for us to be picking winners in this sector when there are so many other better sectors we could be doing it for. 
We heard today from the Minister of Energy and Resources and his sort of seal impersonation. Maybe more in my son’s comprehension he sounded like the count off  
Sesame Street 
 with his “Ah ah ah!”—the ghost of Muldoon. The Minister cannot even count because the numbers when it comes to the economics of oil just do not stack up. This Government is putting offshore oil companies first and the New Zealand environment and the New Zealand taxpayer second. But disappointingly for the Government its whole strategy is in tatters at the moment. We have had the Anadarko Petroleum Corporation pull out of the South Island and we have got New Zealand Oil and Gas pulling out. The Government’s strategy is in tatters. It has got no plan. It came to the country with the Budget and said: “Our plan is we’re going to drill it mine it frack it cut it and sell it.” It is trying to do the cut it and sell it plan but New Zealanders are standing up like they are on the assets and saying that there are better options and that to drill it mine it and frack it is not the only option. 
When you look at the economics it does not stack up. The Government is talking about wanting to grow the export industry. In the best year we are talking about just over $2 billion worth of exports. It is good to be earning foreign currency but what the Government does not point out is that oil is still one of our biggest if not the biggest imports. It is 16 percent of our imports—$8 billion. So if we are going to become an exporter of oil like the Minister’s briefing points out we have got to massively increase our production of oil. The only way we are going to do that is by drilling deep very deep down and that comes with huge risks. We saw in the Gulf of Mexico that the blowout there has cost $40 billion to date. It is in the exploratory stage which we may see Petrobras doing off the coast of the East Coast which is the most dangerous phase. It is not about just having a poke around; you are having a poke around in an environment where you do not know the conditions. You do not know whether there are gas bubbles. You do not know all the threats. That is its riskiest point. 
What we know is that the Government is quite prepared to risk our environment; our “clean green” brand which is worth over $20 billion; our aquaculture; our fisheries; and our tourism industry. We know that Kiwis are going to be facing 100 percent of the environmental risks but when you look at the income side of the ledger sheet it does not stack up. The Minister himself concedes that we have got the fourth-lowest royalty plus tax rate in the world selling ourselves as cheap as almost any other country on the planet. We know that the Government has made a sweetheart deal for the oil industry. It has put a dozen jobs on the skills shortages immigration list so we know that what jobs there will be will go to foreigners. We know that Taranaki which the Minister likes to put up on a pedestal has the lowest percentage of workers to GDP of any sector in the economy. So if jobs are your problem which they are in New Zealand with the unemployment rate being the highest it has been since 1994—at 6.8 percent—then this is the last sector you would look at to be providing jobs. It has the lowest percentage of workers to GDP and we know it is going to be foreign workers. What we also know is that the companies involved are predominantly offshore so the profits are going to flow offshore. 
What we know is that for 100 percent of the environmental risk we are going to see the fourth-lowest Government take in the world we are going to see numerous tax exemptions we are going to see the profits flow offshore and hardly any jobs for New Zealanders. It does not stack up. If you are going to pick winners pick the smart winners look to the future look to the smart economy. This is where the Government could be going with its energy plan. We did not have to scrap the biofuel subsidy. The Government did not have to scrap the solar hot-water grant scheme. In fact what we could be doing is providing a level playing field so renewables—clean energy—could actually compete. The Government is quite happy to throw tens of millions of dollars in subsidies through seismic surveys and free emissions trading scheme credits so the taxpayer picks up the bill to subsidise this sector. But if you are going to pick winners why would you pick this sector when all the economics do not stack up? The smart money internationally—in fact the vast bulk of international investment according to Bloomberg—is going into clean energy not fossil fuels. This is the 21st century economy not the 19th century economy. What we can do is invest in our assets and we can use them to export. What we know is that this Government is quite happy to pay for solar plants in Tokelau and wind turbines in Antarctica. We have all sorts of deals around the world—we have Meridian exporting—but none for New Zealand.