5 Sep 2014

Regions call for resource royalties

6:56 am on 5 September 2014

The regions that are home to billions of dollars worth of oil, gas and minerals are calling on the government for a share of the hundreds of millions gained through royalties.

Dawn breaking over an oil drilling platform in Taranaki, New Zealand.

Dawn breaking over an oil drilling platform in Taranaki, New Zealand. Photo: PHOTO NZ

From 2009 to 2013 the government pocketed over $1.7 billion in payments from the sector.

The majority of the money comes from oil and gas in Taranaki, with royalties totalling $381 million last year alone. The billions go into central government coffers, but now the regions that supply the resource are demanding they get a share.

Hauraki District Mayor John Tregidga said the money would be used by the regions to prepare for large oil and gas companies.

"There is significant infrastructure which needs to be put in place to handle the increase in activity," he said "we don't think that should be met by the existing ratepayers."

Chief Executive of Local Government New Zealand Malcolm Alexander said it would also help regions prepare for when the oil, gas and minerals were gone.

"It's the future beyond that, so building a future for those regions at the end of that activity. Very much a commonality of views between both local government and business."

Local Government New Zealand said it wanted to hold serious discussions with the incoming government about a scheme.

On the West Coast, Greymouth Mayor Tony Kookshorn said a scheme could be a life-saver for the region. He said over the last four years 1500 jobs have been lost on the West Coast and a fund like this would help the region prepare for when mining was gone.

New Zealand forum on oil royalties

From left to right: NZ First MP, Denis O'Rourke, National MP Paul Foster Bell, Hauraki District Mayor, John Tregidga, Green MP Eugiene Sage and Labour MP, Andrew Little at the local government New Zealand forum on oil royalties. Photo: RNZ / Michael Allan

Western Australia has a scheme similar to what the regions here are asking for. It is a royalty-sharing scheme, where the state government puts aside 25 percent of royalties for community projects and infrastructure.

Since 2008, more than a $A1 billion has been raised, going towards affordable housing, funding community pools and supporting aboriginal communities.

Mining company Newmont Pacific Asia spokesperson Kelvyn Eglington said that scheme had proven successful.

"We get to see projects provide the basic facilities of a healthy community. We get good schools, we retain good people, we've got health services. We've got the basics to build on and diversify our economies."

But in New Zealand political parties are split on the idea.

National MP Paul Foster Bell said the royalties needed to benefit the whole of New Zealand.

"The regions are already benefiting significantly. The $800 million dollar royalties we do take are shared out across New Zealand."

But Labour's Andrew Little said his party was open to a scheme.

"That would make a significant difference to those regions in terms of maintaining and supporting the infrastructure needed," he said.

"But also being able to store some away for long term investment and new ventures as the extraction business dries up."

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