Phil O'Reilly: Let's talk about using our resources

Opinion

As we start 2012, we have an opportunity to earn new wealth and control how it is earned and spent.

New Zealand has come out of the global economic crisis with strengthened markets for our traditional soft commodities, dairy and other foodstuffs, and with more market opportunities for sophisticated manufactured goods.

As before, our prospects depend on how well we do business and exploit those opportunities. But there are also new opportunities emerging. Because of new global economic needs and technologies, our hard commodities - minerals and petroleum - offer outstanding rewards.

New Zealand is blessed with iron sands, coal, petroleum, phosphate, precious metals and rare earths. We have been a mining nation for more than 150 years - since the Otago gold rush - and we earn annual royalties of about half a billion dollars and tax revenues larger still. We could be earning much more by responsibly opening access to more of our mineral and petroleum estate.

I acknowledge this is a complex area and people have differing views about it. I believe the best way to address the issues is to be informed and learn from successes and mistakes in other places. Being informed, we can decide whether to develop our resources and if so, the standards by which we do so.

We could create a minerals and petroleum sector with standards for sustainability, safety and environmental protection that are the highest in the world.

Our democratic system allows all New Zealanders to have a say over the development of our resources, most of which are owned by the Crown (that is, all of us), and we have a process by which we can tell the Crown what we want.

The process is the review of the Crown Minerals Act being undertaken on behalf of the Crown by the Ministry of Economic Development.

The ministry has on its website (www.med.govt.nz) a discussion document that interested parties have been able to comment on, and early this year there will be a new public consultation so anyone can make submissions.

We should take this opportunity seriously. We should respond not just to the questions in the review but also put forward our views on the big economic questions:

* Which resources, how much and when, should we access?

* Which offer most opportunity to grow high-tech industries with high-skill, high-paid jobs?

* What level of royalties and taxes should be paid by enterprises wishing to access our resources?

* How much transparency should we demand from those enterprises?

* How can we best use the income earned?

* How can we have world-best safety standards?

* How can we ensure the environment is left the same or better afterwards?

These are not vague, feel-good questions - they require information and specific answers. To answer, we can look at other mining countries.

We shouldn't look to third-world countries with poor environments and poor law enforcement - countries with the "resource curse", where over-reliance on natural resources blocks the development of other industries.

We should look at first-world countries where resources play a part in balanced economic growth, creating industries and employment - such as Norway, Australia and Canada.

None of these countries has a perfect record, of course. For example, we would want to avoid poor practice in how local communities are treated. We would want to ensure all New Zealanders reap the benefit.

Norway shows us how much people can benefit from responsible resource use. Norway's oil revenues play a major part in supporting high-quality health, education and welfare services and infrastructure.

Similarly, our own resources could do an enormous amount to pay for more generous public healthcare, better care for the aged, more teachers, better social services, improved roads, rail infrastructure and so on.

It's not just the current generation that benefits. Norway has set up a public fund from surplus oil revenues to pay for the health and security needs of future generations. It's now the largest pension fund in the world, offering security for generations of Norwegians to come. We could consider using our Future Investment Fund in this way.

Norway achieved positive outcomes because it got consensus among its people. First they decided they wanted to access their resources. Then they decided to be a world leader in responsible practice.

Norway leads the Extractive Industries Transparency Initiative (www.eiti.org), which promotes transparency of information, contracts, laws and revenues in accessing natural resources.

New Zealand should consider becoming a part of this and other responsible global pacts.

Canada has experience we could learn from, for example in mining management systems and from the Toronto Stock Exchange's operational standards, a benchmark in natural resource trading.

Australia has lessons for us, too, in mobilising capital, developing efficient technologies and infrastructure and creating well-paying jobs.

Not least, Australia boasts a healthy degree of public engagement around resource issues - their current public dialogue over the mining tax is a good example.

More widely, we could gain guidance from the Global Reporting Initiative (www.globalreporting.org) and from ISO mining and environmental quality standards.

We could learn from the International Council on Mining and Metals (www.icmm.com), which promotes accountability in resource development.

There are many good examples we can aspire to, but first we need a conversation on what we want and how we want to achieve it.

We can start by sharing our views as the review of the Crown Minerals Act proceeds.

I believe we could do ourselves a big favour by developing our resources sector for the benefit of current and future New Zealanders now and generations to come.

Phil O'Reilly is chief executive of BusinessNZ www.businessnz.org.nz