Local Government New Zealand is lobbying for a cut of the royalties collected by the Government from the extractive industry. BY Lindsay Clark
Mayor John Tregidga told a special Local Government NZ forum in Wellington last month that a ‘local share’ of royalties from the crown’s mining and mineral extraction royalties should return to the community regions where the minerals were extracted.
He argues that sharing royalties with local government happens in most western countries and was part of the wider issue of making rural communities resilient.
Tregidga says when mining business close down or suffer from low prices (such as is happening today with coal prices), the affected communities really take a hard hit. Having a small, but steady, flow of income from royalties would enable communities to resource new directions for the local economy.
He used a modern gold discovery centre due to open in Waihi this month to attract tourists as the sort of community operation that could be funded by a local share of royalties.
Crown royalties over the past five years from mining amounted to $50 million while petroleum royalties were much larger at $1.69 billion dollars over the same period. Most of the mineral royalties come out of Waikato and the West Coast while petroleum royalties from Taranaki for last year were $381 million.
And when new investment comes into a region, particularly in oil and gas, there could be a need for significant investment in infrastructure like roading and bridges. Kelvyn Eglinton, Newmont Gold’s external relations manager for Pacific and Asia based in Perth, supported LGNZ’s campaign for a local share of mining royalties.
Eglinton, who is a Kiwi and previously worked at Waihi for Newmont, says royalties are paid to the state government in Western Australia. The huge mineral industry there pays A$5.7 billion a year in royalties, he adds. In 2008 a change was made to distribute about a quarter of those royalties to nine separate regions within the state under its Royalties for Regions programme.
Money collected for these state regions is spent on existing services and infrastructures, such as parks and housing. Eglinton says a key use for the royalties there is to help communities plan for the time when the mining ended. South Taranaki District Council’s chief executive Craig Stevenson says Taranaki had 2.5 percent of the national population yet produced four percent of national gross domestic product.
“So we believe there’s some room for rebalancing. We’re not after the whole lot … [but] we believe New Zealand would support some reinvestment in the province to allow that [contribution] to continue.”