Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Cunliffe and Jones get real on offshore hunt for oil and gas

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Shane Jones. Photo / APN
Shane Jones. Photo / APN

Labour's Shane Jones has used the rat-cunning skills that got him to the top of Maori fishing politics to manoeuvre his boss, David Cunliffe, into adopting new realism on offshore oil and gas exploration.

Late last year, Cunliffe whipped himself up into a lather by mischievously claiming leaked documents showed the Government was hiding the risk of incidents such as a major oil spill at Anadarko's proposed Kaikoura drilling site.

It had done nothing of the sort.

But as Cunliffe now says, Labour supports deep sea oil and gas exploration "in principle" but would pass laws to toughen environmental protection.

It's tempting to say that right now Cunliffe is displaying all the political traits of a man of principle who knows which side his toast is buttered on.

Let's face it, if big players like Statoil, Anadarko or Shell do strike major oil and gas finds off the coast, there will be a large fillip for the New Zealand economy.

Right now oil is the number four contributor to the nation's exports.

Major finds could be used to either smooth government finances (as Bill English is doing right now through royalty and tax payments) or they could be tucked away in a major state-owned fund for future generations.

Those tainted oil revenues could come in mighty handy for a future Labour Government that wants to spend up large.

Either way, Cunliffe's new approach is a welcome change from that previously adopted when the Labour leader was feinting left into Green Party territory in the misguided belief that this would persuade thousands of apathetic voters to back his party at the upcoming general election.

He should step up the pace ...

When it comes down to it, the usual suspects - Green co-leader Russel Norman, those global capitalists Greenpeace, actress Lucy Lawless et al - are hardly going to forsake jet travel to jump straight back into the Waka Age.

Principles stretch only so far.

So, when Jones played pals with Norwegian oil giant Statoil during its four day "listening tour" in Northland to build support for the exploration of the Reinga Basin for oil and gas he had more than local hospitality on his mind. He was building a constituency among his own colleagues for economic development and the compromises that often have to be made on the jobs front.

Statoil is top of the international game.

There is no guarantee the Norwegian oil giant will find oil. But it knows a great deal about building indigenous support for its operations and had pledged financial support for local communities if it comes up trumps.

Over the Christmas holidays Cunliffe would have received a great deal of feedback from New Zealand business people over Labour's "Yay, Nay" approach.

Investors want to know a future Labour-led Government will be realistic and not captive to the Greens.

Typically, Cunliffe qualified his new public support for oil and gas exploration by saying Labour will look at the Norwegian model for regulating the oil and gas industry, including stronger environmental safeguards and steeper taxes. The industry can wear this. It is, after all, in their own commercial interests to ensure they do not have major spills.

In many respects it is like Cunliffe's qualified support for the Trans-Pacific Partnership. Not against the TPP, but wanting to see the fine print to ensure New Zealand's national interests are looked after in the final deal.

The international investing community has also been heartened by Labour's approach to infrastructure investment and cautious support for public-private partnerships.

Next week, Cunliffe will give his first State of the Nation speech as Labour's leader.

It is a good opportunity for him to paint a vision which speaks not just to the dispossessed, but to those who want New Zealand's economic performance to be lifted further.

He has talked the talk on Innovation and the New Economy. Now is the time to put flesh on the bones.

- NZ Herald

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