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Tax Working Group report due Thursday; oil and gas decisions 'imminent', says PM

Monday 17th September 2018

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The first report of the government's Tax Working Group will be published Thursday, while long-delayed announcements on legislation to allow onshore oil and gas exploration permits to be offered this year are imminent, said Prime Minister Jacinda Ardern.

She would not be drawn on whether the TWG, led by the Finance Minister in the last Labour-led government, would recommend a capital gains tax, but reiterated her administration's commitment not to consider capital taxes "on the family home or the land under the family home".

The first report was an issues paper and would not contain firm recommendations, she said.

Michael Cullen will hold a briefing for media on Thursday morning before releasing the report at 11am.

Meanwhile, Ardern also gave a one-word update on the progress Cabinet is making on legislative amendments it must make to the Crown Minerals Act to ban offshore oil and gas exploration before it can offer exploration acreage onshore for the annual Block Offer. Oil and gas companies bid for the right to look for hydrocarbons that may one day be developed as oil and gas fields.

Energy Minister Megan Woods is out of the country this week and a spokesman for her office was unable to confirm when announcements would be made.

The April 12 announcement to stop offering offshore oil and gas exploration licences shocked the local industry, which had expected more consultation on a decision the government sees as a stake in the ground on its commitment to combating climate change. Critics say the change could lead to higher greenhouse gas emissions if coal rather than natural gas is required to meet electricity demand in dry, windless winters when water levels in hydro storage lakes are low.

In previous years, the Block Offer process would have been well under way before now, with successful bids normally unveiled before Christmas.

One of the most vocal critics of the government's decision and subsequent delays, Woodward Partners energy analyst John Kidd, wrote in a note to clients on Sept 3 that he suspected the government would rush the legislation through Parliament under urgency, on what he said was a "deeply disingenuous pretence" that this was necessary to allow the 2018 Block Offer to proceed.

However, the true benefit of urgency was to "kneecap" normal parliamentary scrutiny for a measure that was likely to be accompanied by a regulatory impact statement devoid of official support for the offshore exploration ban.

Parliament sits for one more week of the current four-week block, before taking a fortnight's recess. That suggests such a process might reasonably be expected next week.

(BusinessDesk)

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