Issue of National Significance: New Zealand's Energy Security   25 Nov 2011

Alan Preston and Marianne Riley

New Zealand’s energy security is an issue the public have the right to hear debated in the run up to the election. It reveals how vulnerable we are because of our dependency on oil and how this current National Government is withholding crucial information so they may continue their unsustainable approach to New Zealand's transport infrastructure. How is this honest or transparent?

The money NZ spends on importing oil has risen 22% this year to over $21 million per day, $7.7billion for the 2010 year,and while the International Energy Agency is warning us to reduce our vulnerability to what are going to become increasingly expensive post 2006 peak oil prices, the National Government is diverting funding from social, health, education and welfare programs, at the same time committing more than $11billion on Roads of ' National' Significance' and threatening to close another 5 of our regional railway lines.

In May of this year the International Energy Agency (IEA), an historically conservative organisation, revised their earlier forecast that peak oil was not due to occur until sometime after 2030, following a study of 800 of the world's oil fields. They are now saying that they believe the peak in conventional oil production actually occurred in 2006 and that unconventional sources (natural gas and tar sands) are extremely unlikely to make up the shortfall because of growing demand from China and India, concluding that 'the age of cheap oil is over' (Radio New Zealand National's Nine To Noon Program on the 25th of May 2011 with the International Energy Agency's Chief Economist , Fatih Birol). The IEA go on to warn that governments around the world urgently need to reduce their vulnerability to increasing fossil fuel prices. It is prudent to note at this point that as a member nation of the IEA New Zealand pays for their advice.

In the context of the above revelations, paying attention to and acting upon New Zealand's dependence on oil is imperative. Early in their first, and current, term in office the National Government was presented with the 2009 Ministerial Report on Oil Prices and Resilience in the Transport Sector which outlined some of the vulnerabilities that New Zealand faces, vulnerabilities that are further intensified by the IEA's latest findings. The National Government appears to not only ignore the agency's warnings, but has sought to ignore and indeed conceal critically relevant information.

The above Ministerial Report was one of at least two significant documents that were only made public after use of the Official Information Act forced their release. The other, the Bolland Report, the Ministry of Transport commissioned in 2010 to provide independant advice on the costs and benefits of rail vs road for freight transport. The report found in favour of rail. This finding is consistent with the IEA's clear indication that more sustainable approaches to transport must be pursued. Why then is this government intent on rationalising New Zealand's rail network in their KiwiRail Turnaround plan - which includes the 'mothballing' of 5 regional railway lines? Such action only serves to increase our vulnerability to oil while concurrently decreasing our resilience.

Equally alarming is this National Government's focus on building roads, and in particular the 'Roads of National Significance' (RoNS) projects. If it is in the country's, not to mention the planet's, best interest to reduce oil dependency, why is the government embarking on such major road building initiatives while systematically dismantling the rail network?

This question becomes even more significant when set alongside the SAHA Roads of National Significance: Economic Assessments Review which identified that at least three of the seven projects assessed prove economically non-viable (that is with BCRs of less than 1). The report also warned against putting too much weight on the incorporation of Wider Economic Benefits (WEBs) as their use is still in its infancy and to some degree contentious. This report was not released for public scrutiny.

What was released to the public was the SAHA Summary Report. This report appears to be a reworking of the original with what can only be described as manipulative changes to the data, including placing unwarranted emphasis on the WEBs despite the above caveats.

Mike Pickford, Independent Economic Researcher and former Chief Economist at the New Zealand Commerce Commission has reviewed both the 'First' and 'Second' SAHA reports . His findings point to inconsistencies both within the original report and between the two reports, as well as highlighting the unconventional and questionable practice of assessing the RoNS program as a whole 'portfolio' as opposed to the more appropriate approach of assessing each project on its own merits. It is this 'amalgamation' process that allows the disguising of the negative returns of some of the projects.

There seems little doubt that taxpayers are being sold a misrepresentation of the facts in order to validate the current National Government's uneconomic and unsustainable approach to transport infrastructure. The question then has to be 'who stands to benefit?'

• For the ministerial briefing on oil prices and transport sector resilience click here.
• For the Bolland Report April 2010 click here.
• For Comments on the Second SAHA Report click here.

(Save Our Rail Northland)

Add a comment

Bookmark and Share


PM to visit Marrakech, Brussels and London

12 Oct 2015 News
New Zealand Government   Rt Hon John Key Prime Minister   12 October 2015     PM to visit Marrakech, Brussels ... more

TPP a win for regional New Zealand

6 Oct 2015 News
New Zealand Government Hon Steven Joyce Minister for Economic Development Hon Nathan Guy Minister for Primary Industries more


FMA licenses Lending Crowd as NZ's 4th peer-to-peer lender

12 Oct 2015 Business News
Article - BusinessDesk   FMA licenses Lending Crowd as NZ's fourth peer-to-peer lender By Suze Metherell Oct. 12 (BusinessDesk)... more

Analysts upgrade price target, earnings for Air NZ

12 Oct 2015 Business News
  Analysts pick higher Air NZ share price after airline lifts first-half guidance By Fiona Rotherham Oct. 12 (BusinessDesk) -... more


Interview: Dave Dobbyn on what it means to be a Kiwi

12 Oct 2015 Entertainment By Charlotte Everett
Dave Dobbyn is arguably New Zealand’s most iconic singer-songwriter - just hearing one of his songs evokes a sense of home and... more

Maori honey interests back manuka trademark,seek involvement

12 Oct 2015 Food & Wine By Suze Metherell
  Maori honey interests back manuka trademark,seek involvement Oct. 12 (BusinessDesk) - The Miere Coalition, which represents... more


Auckland house prices rise to record in September

6 Oct 2015 Property By Suze Metherell
Auckland house prices rise to record in September as regulations loom, Barfoot says Oct. 6 (BusinessDesk) - Auckland house prices ... more

Chinese property investors disappearing from the auction room

28 Sep 2015 Property
Chinese property investors are rapidly disappearing from the auction room, says the boss of Auckland's biggest real estate... more


New migrant service launched for New Zealand and Australia

12 Oct 2015 Migration
Those looking for a sense of security when immigrating to New Zealand or Australia, need look no futher than the first inusrance... more

NZ's annual net migration reaches record 60,300 in August

21 Sep 2015 Migration
  NZ's annual net migration reaches record 60,300 in August on Indian, Chinese students By Jonathan Underhill Sept. 21... more


Winter holiday makers drive visitor growth

28 Sep 2015 Travel & Tourism
An increase in overseas visitors seeking a winter break resulted in an additional 10,000 holiday arrivals to New Zealand in August, as... more

Smartpay forecasts second year of earnings decline

8 Sep 2015 Travel & Tourism
Article - BusinessDesk   Smartpay forecasts second year of earnings decline By Tina Morrison Sept. 8 (BusinessDesk) - Smartpay... more


Kiwi Eventers Rio Bound

12 Oct 2015 Equestrian
  New Zealand’s eventers have qualified for the 2016 Rio Olympic Games this morning at the Military Boekelo Horse Trials... more

RWC 2015 Set to Welcome European Qualifiers

6 Oct 2015 Rugby
RWC 2015 Set to Welcome European Qualifiers Georgia and Romania can confirm their attendance this weekend Final placings likely to go... more


Gordon Campbell on the TPP deal reached in Atlanta

6 Oct 2015 Opinion By Gordon Campbell
Gordon Campbell on the TPP deal reached in Atlanta If the TPP was the Rugby World Cup, the New Zealand team probably wouldn’t ... more

Gordon Campbell on the TPP countdown, & Mary Margaret O’Hara

5 Oct 2015 Opinion
Column - Gordon Campbell   Gordon Campbell on the TPP countdown, and Mary Margaret O’Hara While Australia and the US have... more

Kiwi Success

Sanford appoints Rob McLeod to board, seeks Maori tie-up

6 Oct 2015 Appointments
Article - BusinessDesk   Sanford appoints Rob McLeod to board, seeks tie-up with Maori fisheries By Paul McBeth Oct. 6 ... more

Fonterra director Farrelly replaces Norris on Fund board

23 Sep 2015 Appointments By Paul McBeth
Fonterra director Ian Farrelly replaces Ralph Norris on shareholders' fund board Sept. 23 (BusinessDesk) - Fonterra Cooperative... more


'Close to zero' chance of another bum hire: FMA's Everett

2 Oct 2015 Recruitment By Fiona Rotherham
  'Close to zero' chance of another bum hire, says FMA's Everett Oct. 2 (BusinessDesk) - Financial Markets Authority chief... more

More action needed to reduce Gender Pay Gap

2 Oct 2015 Recruitment
New Zealand Government Hon Louise Upston Minister for Women   2 October 2015 Minister for Women Louise Upston says she is... more