Country needs proper plan for transition from oil industry

CTU secretary Sam Huggard says there has been a little bit of fearmongering from the oil industry with its talk of thousands of workers losing their jobs.

The Council of Trade Unions warns the country needs to plan properly to ensure new industries emerge and grow as the oil industry shrinks.

But CTU secretary Sam Huggard says that, by deciding now to end new offshore oil and gas exploration, the government has left enough time to plan the transition to other industries.

Mr Huggard says it is a big decision and the CTU recognises crude oil is an important export for New Zealand.

Export figures from Statistics New Zealand, however, show crude oil exports falling in both value and as a proportion of total exports. In 2008 the country exported $2.769 billion of crude oil, which represented 6.45% of total exports of $42.9bn. In 2017 crude oil exports had fallen to $625.35 million, or just 1.17% of total exports of $53.6bn for the year.

Mr Huggard says workers will be rightly worried about their jobs, although no one will lose their job immediately as a number of the existing oil and gas permits extend until 2046.

“Workers will be really concerned to make sure that this is done right. Let’s be clear a lot of those jobs are really well-paid jobs. They’re supporting a lot of families and communities. They will be rightly anxious to make sure they’ve got a future.”

Mr Huggard says he has been reassured by government statements that this will not be left to chance.

He says work needs to be done on identifying industries that can pick up the slack as the investment in oil and gas falls. It is worth noting though that for the first time global investment in renewable energy outstripped investment in drilling for oil and gas last year.

Alternative investments
“There has been enormous investment, particularly in solar in Australia and China, and all our competitors are getting in this space and we need to be doing that sooner rather than later. What we want to make sure is there’s a plan to support workers through that process so we don’t have the big ups and downs, the big layoffs as we saw particularly in the 1980s with all the manufacturing and SOE closures and changes to those SOEs.”

Mr Huggard says the CTU wants to be part of the planning and make sure workers are contributing to that. What was needed was a signal the country could not continue to rely on fossil fuels forever and that there needs to be investment in other energy sources.

“I take some heart from the work Venture Taranaki and others have done before this year, you know last year, the year before, identifying the role of their new sectors they’re keen on putting resource into in terms of clean energy, in terms of lifting food manufacturing up the higher value chain of the visitor profile. And I think Shane Jones has been right to add in Maori economy to that dimension as well, of boosting support there.”

Mr Huggard says there has been a little bit of fearmongering from the oil industry with its talk of thousands of workers losing their jobs.

Petroleum Exploration and Production Association of New Zealand (PEPANZ) chief executive Cameron Madgwick told NBR last week the government’s decision reflected its “fundamental misunderstanding of the industry.”

Mr Madgwick says that with less work there will almost certainly be job losses.

“The government has clearly said there is nothing for these people to do. That’s got to have an impact on jobs.”

But Mr Huggard says that is not going to happen overnight and if the government, industry and unions work together alternative industries can be developed.

“There is a long time to get this right and to plan it. And I guess what we would have liked to have seen from the oil industry representatives last week was a more responsible attitude that, yes, we realise change is happening and that investment in renewables is far outstripping our sector and we can use our expertise and intellectual capacity, our scientific base to be part of a transition.”

He says he knows the industry is already thinking about this seriously and about what role hydrogen can play as a transition fuel.

“We can do this with the time we’ve got available but we can’t do it if we just leave it for another five or 10 years and continue mining, continue exploring for oil and gas and then have a major shock in 10 years.”

Mr Huggard says the biggest challenge for the government will be over working out what to do with natural gas and the role it might play in the transition to renewable energy.

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The only viable green alternative for electricity generation is smaller scale nuclear.

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Why weren't oil workers anxious about their futures already? At what point were they going to realise they are employed in an industry that has a defined (if somewhat broadly) end point?

As an article in the Herald rightly pointed out (ignoring the questionable quality of the Herald's regular reporting for a moment), the writing is on the wall for fossil fuels. Time has almost run out for oil and regions dependent on oil should already have plan B.

It isn't as though its breaking news that Global Warming is a serious issue and that oil is running. Add in political uncertainty and global trade relations and you really wonder about the prospects.

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Facile.

Fossil fuel, esp gas (with half of the emissions of coal), made cheap by capitalism, which has been responsible for the best standard of living, by far, of any previous civilisation, is far from being a sunset industry as regards a free market and continuing high standards of living for humans; the notion of peak oil is similarly ludicrous. There is no way green energy currently can fill the gap - go look at a pie chart of the worlds energy sources: green energy is a slither so narrow it appears as a single line.

This thriving, well-paying industry is only a sunset industry when mandated arbitrarily by autocratic government, which will be to the detriment of all of us whose individual rights and volition have been run roughshod over, particularly the employees of this industry, including one of Taranaki's biggest engineering firms which as announced this week they'll be stopping all future employment. And the irony is this decree by an arrogant government will lead to more coal use, higher power costs and an unreliable power grid, as shown by the experience of NSW and Germany. There was no analysis conducted here at all, nothing: they have broken a free market by the arbitrary ending of an industry, and now insanely expect the free market to coordinate a solution for them which it can't - if these MPs were directors of public or private companies, they could be sued for such feckless recklessness.

And Princess Ardern, who announced the destruction of this industry, and with it the future of Taranaki which has the highest GDP per capita of any province, and pays twice the average wage via this industry, did so deliberately before her EU trip, specifically so she could be fawned over as the new Lefty darling, after Trudeau made such an embarrassing numpty of himself in India. It was self-serving, vainglorious foolishness. I can see for first time why Winston made her the Chosen One.

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If all you say is true then perhaps you can explain why the government has bothered to make this "announcement" at all? Surely those other forces will determine the outcome for the industry without the need for government meddling. The range of possibilities are much broader than government policy based on mindless ideology. You can't seriously argue that you can predict how the energy future will look. New technologies may change the environmental footprint of oil and gas including the ability to safely extract it. Let's put it this way. If it was known today that block offerings which will now not be made would result in a huge oil and gas find off the coast of NZ would this government still make the decision to ban it?

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Ummm .... well let's start with grandstanding before we leave for a European Trip, another photo shoot for Vogue magazine, another notch on the belt in your UN aspirations .... just to mention a sinical few points, none of which are rational .... meanwhile in the real headlines ... The provinces have been smashed by 2 or 3 cyclones, Many in Auckland are still without power, child poverty seems to have been all cured and those 100,000 affordable homes are just going to pop up next week next to the 1 Billion trees .... yeah right

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Huggard was never going to say anything else he is backing the party they put in to power. The CTU want more members and the oil & gas industry is not a target for them so there is little concern from them for those workers

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yes I thought the interview was a lot of gobbledygook. Having been prompted he must have used the word "plan" a 100 times and did not explain how exactly the government decision "helped" the industry. It certainly doesn't need help of that kind

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I’m not sure what this policy achieves, apart from degrading our economy and sending talented people for the search for oil and gas to other parts of the world.
Ideology that will achieve nothing.
How about Gst free Electric cars to help shrink our overaged gas gobling fleet of vechiles.

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Alternative energy and alternative (complementary community) currency have been 2 more of my obsessions? since coming to New Zealand.
Vegetable Oil, particularly Waste Vegetable Oil, (WVO) not to be confused with "Biodiesel," is a real, viable alternative to diesel. I still run 1 vehicle on a mixture of diesel and WVO with no alteration/modification to the engine and get the same fuel economy and speed as on ordinary diesel. I used to run 3 vehicles on it at one time, but one was sold and the other,sadly, was written off in an accident. There was a time when I collected the WVO from restaurants and filtered it myself but then, the governement decided to get into the biodiesel business and, after wasting some $60 Million of taxpayers' money, they decided to get out of it again. One of my vehicles was a Ssanyong truck which had a conversion kit on it and I could go from Paihia to Auckland on ONE LITRE, yes, ONE LITRE, of diesel. The truck had a 100 litre tank on the back for the WVO. I could, and did, go much further than Auckland simply by having a supply of 20 litre containers on the back. The government during its "biodiesel debacle" had farmers in the South Island growing canola which was transported to Christchurch to be turned into biodiesel. A more sensible proposition, in my humble opinion, would be certainly to grow canola but to use the pure oil for fuel and use the meal as cattle feed, as outlined in this article" https://www.producer.com/2017/03/canola-meal-in-cows-diet-beats-the-comp... Here is another ineresting article, "Canola as a forage crop." "https://www.producer.com/2017/03/canola-meal-in-cows-diet-beats-the-comp.... So, there you have it (1) Canola oil as an alternaive to diesel, better that than for cooking! (2) Canola meal as a cattle feed (3) Canola as a forage crop.
Not forgetting an alternative to petrol of course. Hopefully NBR wil publish this and i will do another one about alcohol as an alternative to petrol

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How many m2 of land is required to grow enough canola to power just 1 diesel car? Answer that question and you will see why these sorts of ideas never scale up.

Canola requires ariable land that is currently used for other farming. So you would have to eliminate the dairy industry to free up land. Then you still need fertilizer and pesticides. Harvesting, transport and processing. Which also need fuel.

These sorts of ideas have already made food unaffordable in 3rd world countries. Due to farmers growing fuel crops or other cash crops such as coffee. And all of the extra tropical Forrest destruction and habitat loss to get more land to grow crops that supposedly help the environment.

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Thanks for your reply Andrew. Please remember that it is not just the oil from the canola, it ia also the cattle feed and forage, so very litle, if any, waste. There would also still be the WVO (Waste vegetable Oil) as I don't imagne that everyone would stop cooking with Canoa overnight. I must confess that I don't know how many m2 of land would be required to pwer 1 diesel car. It is a point and I will see what I can find out. Here n Northland, it would also,apparently, take a different kind of seed from the South Island, due to our vastly superior climate! I did quite a bit of research, but it was quite a while ago so I would have to have a dig around
It would be interesting to know how many of the South Island farmers who were growing canola for the government's ill fated biodiesel programme are still growing and what they are doing with it. I take your point about fertiliser and pesticide and as far as harvesting, transport and processing are concerned, I would envisage small local cooperative enterprises. Have a look at this video https://www.youtube.com/watch?v=ogcv9xS8Pkw by David Blume and you will get an idea of what I mean.
We certainly don't have cheap food here and we won't be cutting down forests. I regulalry drive past tracks of lan growing nothing but rubbish. I am not a farmer and so I don't know if it would class as arable.

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'Canola' Oil is a registered trade name for Rapeseed oil, coined last century to avoid the connotations of the name. Original Rapeseed was poor as a stockfood because of harmful side effects on animals. It was a stock food of last resort.

To avoid the use of pesticides you have to use seeds that are heavily genetically modified, as is the case if you don't want consumers getting muscle diseases like the animals that were
fed it. It is a heavily regulated product for that reason.

You will find that all 'safe' Canola Oil is genetically modified, which is why virgin olive oil is chosen by people who value their health. GMO is just as bad as the original side effects. The greens will quite (or should) rightly kick up a stink about GMO rapeseed.

I would suspect that the long term effects of massive GMO canola production in the quantities required to replace petroleum, will create issues far worse than they solve. Fuel made from dead dinosaurs for a few more decades or fuel made from GMO rapeseed. The choice is easy.

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Thanks for this Samuel, all feedback is greatly appreciated. You have set a new task for me, primarily to find out if the Canola grown in the South Island is GMO. I have no wish to see GMO Canola grown and Northland is a hotbed of anti GMO/GE stuff. I find your comment about "Original Rapeseed neing harmful etc" interesting in view of the articles that i attached

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OK, Samuel and Andrew. I did some checking and here is what I found.
1) ALL Canola grown in New Zealand is NOT GMO/GE
2)Canola is being grown increasingly in New Zealand for cooking oil. I had a chat with Dean at Pureoil, "https://www.pureoilnz.co.nz/contact.html", and he was most helpful. He also told me that they have 3 types of "meal" that are used for animal feed. Here also " https://www.stuff.co.nz/business/farming/cropping/72713156/oilseed-rape-... is an interesting artlcle that I found.
In answer to Andrew's question about how many m2 of land etc. Dean, at Pureoil, indiated that an average return per hectare would be 4 tonnes of seed of which 40% would be oil. So there would be 1.6 tonnes of oil. I did more checking and found that 1 litre of vegetable oil weighs 0.89kg so, on these figures 1 hectare of canola would produce around 1,400 litres of oil PLUS 2.4 tonnes of meal PLUS whatever was left over for sileage.

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Ok great – I’m assuming that yield is per annum, so that means each hectare of canola produces around 9 “barrels” of oil a year (each barrel being 159 litres).

New Zealand currently imports about 55 million barrels of oil (both crude and refined) per annum. On the assumption that canola oil is at least equal to crude oil in energy output – which I’m not qualified to comment on, but on the face of it seems pretty dubious – if we were to replace all our oil consumption with canola instead, we would need to cover just over 6 million hectares of our land in canola, all the time, just in order to meet current levels of demand.

Given our land area is some 27 million hectares, and we have a lot of mountains etc, would we even have 6 million hectares of arable land? And if we do, what other productive industries would need to be displaced in order for this to work, and at what cost?

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Thanks for your reply Anonymous. I think, with respect, you are comparing apples and oranges.
First of all, as you say, we have to IMPORT the crude oil and then process it into whatever and truck the fuel all over New Zealand, just like the government had to do with its biodiesel. The Canola oil is ready to use as a fuel when it has been separated from the seed, the meal can be used as animal feed and "the green stuff" for silage. It would also be produced and sold locally creating, hopefully, small local cooperative type businesses with local ownership and local jobs as opposed to mega corporates employing number as opposed to human beings. We could get into a really lengthy discussion here but NBR might not like and extended conversation. All I am saying is that we can produce alternatives to diesel and petrol, locally and sustainably. I don't imagine that it will happen due to "the vested interests," referred to in another article, who play the media like a fiddle and ensure that anything "innovative" and "anti establishment" doesn't see the light of day. I would go into more detail if you wished,it is your call
Second, I will just say this, I get exactly the same performance from the Toyota van that runs partly (I will qualify this later) on WVO (Waste Vegetable Oil) which can be any oil, peanut,sunflower,canola, whatever. I say runs "partly" as it would be difficult, even in our subtropical Northland climet, to run a vehicle on 100% vegetable oil. I am also not suggesting that we totally replace diesel with veggie as I said earlier. Thanks again for taking the time and trouble to reply

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Any suggestion this is a managed transition to as far out as 2046 is false. If existing exploration permit work for known large for fields offshore Canterbury and Southland is not completed then those permits will lapse within a year or two. Households and businesses in Christchurch and other cities and towns in the South Island will then have lost the opportunity for gas supply to substitute for coal and to build gas export businesses such as Methanex to lift regional GDP.

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The government needs a plan, full stop.

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Haggards comments are complete garbage There is no plan, there are no alternatives other than nuclear Green industry is minuscule

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I have to wonder if Graeme's reference to "HAggards comments" is a "Freudian slip!"

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Oh, and Haggard hasn't a clue how free market coordination works; like this worrisome government, he thinks you can just decree some industry or other can be demanded, or created by central planners, to replace a vibrant, successful industry destroyed by sheer whim. God help us.

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What annoys me is likening this stance to that of being Nuclear Free.

I think it more akin to interest free student loans. We all know its a dumb and ill-conceived policy but politically difficult to unwind.

And lets be clear here... this is a goal... not a plan. There is no plan.

As far as the comments from this Huggard chap go..... I think he is letting his political bias override his actual role. His role as CTU secretary is to protect the jobs and working conditions of his members. He has effectively said "Jacinda has said she has a plan and that's good enough for me".... if I was a member of CTU I would be calling for him to stand down for being AWOL.

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The irony about the nuclear free comparison is that New Zealand has one of the higher percentages in the world of energy from renewable sources. To go 100% away from non renewable would probably mean embracing nuclear power!

The USA and Australia have only a small portion of energy from renewable sources and use lots of oil and coal. Australia has very high sunshine levels compared to NZ but solar hardly features, as is the case with wind power.

The only viable way to increase renewable without going nuclear, is significantly more hydro dams, which the greens will not be happy with because of the impact on the environment.

In any transition planning and strategy, one of the first principles is to always leave yourself a fall back position, in case things don't happen as fast or as you intended. Another principle is to hope for the best, but have contingencies for the worst. Run up time for Hydro takes decades so best not to stop drilling for oil just yet or you risk throwing the baby out with the bath water.

It is not surprising that Jacinda's planning does not reference these two basic principles since her management strategy for New Zealand, and the future generations also appears to not be based on any solid principles. Jacinda appears to operate on expediency and winging things on the day.

You have to admire her enthusiasm, but without the dedication to governing by principles, she is playing Russian Roulette with our future, and that of future generations. Shirt sleeves to shirt sleeves in three generations.

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The really interesting dynamic that the Greens and labour will face is that the move to solar, particularly micro grid technology typically means the burden of power company profits fall on the poor. As the gentailers see their revenue fall they increase the price to make up the shortfall. As in Germany those who can afford solar panels on their roof install them to enjoy lower power costs, the poor cannot, hence they are an easy target for profit hungry power companies. The Labour government has already signalled its complicity in this pyramid scheme https://www.stuff.co.nz/national/politics/opinion/102708888/way-to-be-cl...
So on the one hand embrace solar power but on the other hand prepare to pay more for hydro generated electricity as solar users are forced to ‘subsidise’ the current oligopoly, good luck selling that to your electorate James and Megan

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Very good point. Actually if the Greens and Labour were forward thinking and caring sustainability, as they claim, they would relax various laws that prevent micro grid generation.

Rivers for example, represent a huge source of dynamic energy using micro generators without having to put dams in place. They are the electrical equivalent of a water wheel. Small Archimedes screw generators produce electricity where and when you need it and are used widely overseas in rivers, large streams etc. Anywhere there is a decent flow of water. Like solar it does not have to have a huge output because it can be stored in batteries, meaning that even reasonable size streams with a drop of

And you are not limited as to how many are used.

A few years ago, someone relayed a story to me about a guy who had a remote house in the South Island, next to a river. Built an inexpensive submersible Archimedes screw generator supported by a couple of pontoons and anchored by a steel cable to the bank. It provided enough direct energy to power his entire house and plenty left over.

Windsor Castle has an Archimedes screw generator powered by the Thames river. These are large scale generators. Despite the size and cost they have very short payback times.

https://www.engineerlive.com/content/hydroelectric-project-castle

But of course the flowing water in NZ is owned by the state. Controlling governments and oligopolies hate citizens being independent.

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Typo... should read "...reasonable size streams with a drop of 1 metre and 0.7 cu metre of water per second. As little as a 200mm drop can be used if there is sufficient flow."

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Huggard's comments are typical of trade union hypocrisy. Unions care nothing for "their" workers (or comrades) but everything for their sick ideology.

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It is interesting, to me at least, that "both ends of the spectrum," Mr. Huggard for CTU and Mr.Madgwick from PEPANZ, use fear (loss of jobs) to justify their position, as, doubtless, would be the ploy of the breweries to any measure that would affect their bottom line. The fact that measures might benfit the people by creating jobs in other fields, like canola fields!, for example are of no interest. The growing, and use, of canola could well create lots of small, local businesses, increase the use of currently unused farm land, help to rdeuce, or even eliminat,e the use of fuel tankers which constantly tear up our roads.

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If you think that our stopping exploration is suddenly going to generate the kinds of jobs you have described then it would appear that you do not have a well developed understanding of economics. NZ is not a closed economy - we will simply import other countries oil and gas as we do now until such time as oil and gas is superseded by something that makes better economic sense

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OK, alcohol as an alternative to petrol. I have a friend who runs his plain old Toyota van on 50% petrol and 50% alcohol. He makes the alcohol fuel himself purely from waste fruit. Here in Northland, we send truck load after truck load of Kiwifruit, among others, to the dump because they cannot be sold. I won't even touch on the fact that Countdown has a bin for food donations, we have food banks and , although I haven't seen it, I believe that there is a TV commercial asking for money to buy food for children. The trucks taking fruit to the dump(s) could, just as easily be taking it to a local alcohol for fuel producing operation. Here "http://www.mbie.govt.nz/info-services/sectors-industries/energy/liquid-f... you will see that there is currently no duty (tax) on alcohol/ethanol fuel. Here "https://www.youtube.com/watch?v=ogcv9xS8Pkw" is a link to a great video by David Blume. He came to New Zealand in 2008 and did a presentation in Kaikohe. I have some of his books,anyone interested, send me an email to "searcher1068@yahoo.com. We CAN be sustainably energy self sufficient all we need is the will, some money and Kiwi ingenuity

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Mr Waterhouse, your attention please.
There has been at least two people posting in this thread that are attempting to teach you that, the consumer employs us all, they have done so since the beginning of time and I believe, (in spite of all the regulations and taxation of politicians who think they know better,) will do so 'til the end of time. It is "Natures Law"
"Natures Law" is a translation from both the Greek and Latin word for "economic"
Now Mr Waterhouse, what exactly do you not understand about that.

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So you want to take us all back to cottage industry days then?

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Is BIG so BEAUTIFUL? Control of the MANY by the FEW? No local responsibilty?

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Big is not so ugly if the consumer likes their produce and price.
As I said Mr Waterhouse, the consumer is the only employer.
It is the consumer that pays the wages, it is the consumer ........

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This country needs a proper plan for a growing list of things

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The most critical plan required is how to dump these chumps at the next election

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Poorly thought out no proper consultation This will be a disaster for energy security Jobs and electricity prices to consumers

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The National approach to this situation would be to ignore it. I think we need to change what we're doing if we want any hope of changing our trajectory (which is currently pointed down, into the ground, at speed).

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What trajectory specifically ?

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Live in cars and ride bikes whilst smoking pot. No more oil Yay ! Thanks Labour.

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It won't happen....so stop worrying about it.

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What a pity Rod Oram's review wasn't available to respond to some of the sillier comments above: https://www.newsroom.co.nz/2018/04/21/105687/rod-oram-shedding-light-on-...

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