RICHARD PREBBLE: Labour’s gas ban was reckless and they are promising to do it again

Politicians make mistakes. They are human. Decisions must often be made with inadequate information. It is easy to be wise in retrospect.

We should be understanding.

What we should not be forgiving is reckless decision-making — when politicians ignore the safeguards designed to prevent foreseeable errors and then refuse to take responsibility for the outcome.

Officials are not always correct, but when ministers choose to disregard official advice, they should be accountable for the consequences.

Mistakes were made in response to Covid-19, but Covid was unprecedented.

The most reckless decision with profound consequences today was made by the Labour Cabinet in April 2018 — the decision to halt the granting of new offshore oil and gas exploration permits.

This was not a minor adjustment. It was a strategic decision affecting energy security, the price households pay for power, and New Zealand’s ability to keep the lights on in dry years.

What makes the decision stand out is not only what was decided, but how it was decided.

Major policy changes are normally meant to be supported by written analysis and proper consultation. In this case, the decision was taken as an additional oral item at Cabinet. There was no formal Cabinet paper.

That is extraordinary. A government may choose to take an oral item in a genuine emergency. But this was not an emergency. It was a permanent change to the future of New Zealand’s only petroleum basin.

The Cabinet minute does not record which minister brought the item. But the policy was announced by Prime Minister Jacinda Ardern. In my experience of Cabinet, that strongly implies the Prime Minister’s office was involved. The portfolio minister, Megan Woods, would inevitably have been central.

Crucially, Labour did not campaign on an offshore exploration ban in 2017. The country was never asked to vote on it.

Only a month earlier, officials had declined a routine offshore exploration application from Greymouth, an established New Zealand energy firm. Greymouth challenged the decision in the High Court. The Crown was ordered to reconsider, and years later the permit was granted.

Greymouth is an established company. That they went to the expense of a High Court challenge demonstrates the industry believes there is value in exploring New Zealand acreage.

When the Government then moved to legislate the ban, officials gave devastating advice against it. They warned that restricting gas supply would not reduce fossil fuel use but would shift it.

Officials warned that if methanol production moved offshore, it could be made in China using coal, with far higher emissions.

They warned the policy would put upward pressure on electricity and gas prices.

And they warned that in dry years New Zealand would burn more coal.

We are now living in the predicted scenario. The Electricity Authority has confirmed that when gas is tight Huntly is burning coal from Indonesia.

This is the great irony of the 2018 ban. It was sold as climate leadership. In practice New Zealand burns more coal.

MBIE’s published price series shows wholesale gas prices rising about 83 per cent between 2018 and 2024, and they are expected to continue increasing.

Labour’s exploration ban is today a significant driver of inflation. Households now pay for an energy system that is more fragile and more expensive.

Last week, Labour debated whether the cost of the Government’s proposed LNG import facility is a levy or a tax. What is not debatable is that Labour’s decision contributed to New Zealand running out of domestic gas — and we are now paying to import what we once produced.

The Taranaki Basin is one of New Zealand’s greatest natural resources, producing for decades from fields such as Maui, Pohokura and Kupe.

Mature does not mean exhausted. A U.S. Geological Survey assessment estimates that the greater Taranaki Basin and adjacent East Coast Basin still contain significant undiscovered conventional hydrocarbon resources — in the order of hundreds of millions of barrels of oil and tens of trillions of cubic feet of gas.

That is the tragedy of an exploration ban. We will never know what New Zealand might have found — because we chose not to look.

Exploration rigs, skilled workers and seismic investment do not sit idle. They go where the regulatory environment and commercial signals encourage them.

Even if exploration begins tomorrow, it could be a decade before meaningful commercial gas is found and piped ashore.

There are no rich countries that are energy poor.

Last winter, a series of mainly provincial manufacturers cited electricity costs as a factor in closure. Energy affordability matters for jobs and communities.

Labour says it will reinstate the offshore ban. It is not often a political party campaigns to increase the price of electricity.

The Honourable Richard Prebble CBE is a former member of the New Zealand Parliament. Initially a member of the Labour Party, he joined the newly formed ACT New Zealand party under Roger Douglas in 1996, becoming its leader from 1996 to 2004.