Energy Minister Megan Woods defends lack of cost-benefit analysis in oil exploration ban

Energy Minister Megan Woods says no formal cost-benefit analysis on the oil exploration ban was done because no one knows how much is still in the ground.

In April the Government said it would be offering no new permits, but the decision has come under fire from the industry and workers, particularly in Taranaki, who say it will hurt the economy and do little to fight climate change.

While many saw the decision as coming out of the blue, Ms Woods told Newshub Nation on Saturday it shouldn't have come as a surprise to anyone.

She told host Lisa Owen she had outlined the Government's plans in a conference with industry leaders two weeks earlier.

"Two weeks before the announcement… I gave reassurances that any changes that were coming that we would honour existing permits, that there would be a very long time period over this, and we would be doing this transition planning."

Her speech didn't mention a complete ban on new permits, but she insists the Government's views have been "clear" since December last year, when it started getting advice on whether a ban was workable.

"Over that four months I certainly knew what industry's view were. I was taking meetings with industry where their views were clear, our views were clear as well. But this was actually a matter of a Government making a decision about the future."

Ms Woods says her advice came from the Ministry of Business, Innovation and Employment, and she assumes Treasury had an input in terms of the economic impact.

But as Newshub reported in April, Treasury's CBAx cost-benefit analysis tool wasn't used.

 Ms Woods says there's no way to know the full economic impact of the ban because there are just too many unknowns.

"We don't know what's under the ground in places that don't currently have exploration permits. You've actually got to have numbers to calculate… We certainly looked at a range of implications, and we'll be releasing all that advice in the next couple of weeks."

Advice on whether the ban opens the Government up to legal challenges is also expected to be released in the next few weeks.

The Crown Minerals Act requires the Government to promote exploration in New Zealand.

"We are doing that this year," said Ms Woods. "At the moment we have out for consultation an onshore block offer, where people will be able to go for exploration permits."

She's getting advice on how that Act will need to be changed so the ban complies with the law.

"We could do the easy thing and make three-year decisions, or we can actually have the courage to look beyond the political cycle and put place the planning that's required for these communities so there are jobs and industry and security for them in 10, 20, 30 years when these changes will take effect."

Megan Woods.
Megan Woods. Photo credit: Newshub Nation.

But has the decision already cast a pall over Taranaki? National MP Jonathan Young told Newshub some workers can't get mortgages now because banks aren't convinced they'll have jobs for very long.

"I know of people who can't get mortgages because they have fixed-term contracts with exploration companies. The effects are immediate - they're not just 30 years away."

And at a meeting between Government and industry representatives this week, some businesses reportedly said they were in the process of shutting up shop as a result of the ban.

"What we were told is there were some people in exploration that were maybe having to look at fewer staff," said Ms Woods. "...But no one actually shutting up shop. There could be some jobs [gone], but the point is… there have been jobs shedding in Taranaki since 2014, and that's exactly the reason we have to get on the ground and support the local efforts around the diversification of the economy."

Industry leaders and local government requested $42 million be invested over the next three years in planning for the future of Taranaki's economy. Ms Woods said the Government could end up putting in more than that out of its Provincial Growth Fund.