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NRT: A good idea from NZFirst

Written By: - Date published: 7:06 pm, March 20th, 2014 - 4 comments
Categories: Economy, election 2014, Mining, nz first, winston peters - Tags:

no-right-turn-256This post first appeared here at No Right Turn and has been reposted it to allow it to be commented on.

From an environmental economics perspective, mining is a wealth transfer, shifting public wealth (in the form of minerals in the ground) into private profits of mining companies. Along the way, it creates jobs, but it is basically spending capital, like living off the savings in your bank account. And in regions like the West Coast, we see what happens when the resources run out or become unprofitable to extract: the jobs disappear, and a regional economy geared solely to resource extraction withers and dies.

The way to solve this is to invest some portion of those mining profits into economic development, so that the economy grows and diversifies. At the moment, this is done privately, and usually elsewhere, by the mining companies and their shareholders reinvesting their profits, so there’s no benefit to the extracting region. But NZFirst has hit on a policy to change that, by requiring a portion of government mining royalties to be returned to the region they were extracted from for economic development:

New Zealand First will deliver a share of mining royalties to target development on the West Coast, says New Zealand First Leader Rt Hon Winston Peters.

“We will ensure 25 per cent of the royalties paid for mining are placed in a regional development fund, and not absorbed into the Beehive’s piggy bank,” Mr Peters told an audience in Greymouth.

While the press release is focused on the West Coast, the full speech makes it clear that this is a scheme for all regions, with royalties going to regional council controlled regional development funds. And so they should: its their wealth after all.

4 comments on “NRT: A good idea from NZFirst”

  1. Draco T Bastard 1

    From an environmental economics perspective, mining is a wealth transfer, shifting public wealth (in the form of minerals in the ground) into private profits of mining companies.

    And the way to fix that is to have the government do the extraction itself or contract a private firm to do it and keep whatever is mined itself which it can then sell, stockpile or shut the operation down. No licensing and thus no transfer of wealth to the private sector.

    The way to solve this is to invest some portion of those mining profits into economic development, so that the economy grows and diversifies.

    Incorrect. The way to do it is to have the local people decide what local development that they want and then see what’s needed to provide it. This would mean that our resources are only extracted as needed rather than the continuous over extraction that we have now that is the result of the private profit driven system.

  2. It’s a copy of the (ironically named) Australian Nationals’ Royalties for Regions scheme.

    A good idea in theory, the money has gone into infrastructure – anything from youth centres to swimming pools. What’s been lacking is funding for, say, youth workers so that, after a well publicised ribbon cutting by the Minister for Regional Development (and leader of the Nationals) the sparkling new facilities are all but deserted.

    Politicians tend to like brass plaques with their name on them. And they positively love photo opportunities. While this has the seed of a good policy in it, any implementation needs to guard against politicians’ edifice complex.

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