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Sharing mining royalties positive for councils, communities

21 March 2014


Sharing mining royalties positive for councils and communities

Local Government New Zealand (LGNZ) supports New Zealand First’s policy to share mineral mining royalties with local authorities, which is in line with LGNZ’s policy for royalties from all mining, oil and gas extraction to be shared for the benefit of local communities.

New Zealand First announced yesterday that it would deliver 25 per cent of mining royalties directly to a regional development fund to target development on the West Coast, where it is estimated that more than $80 million would have gone to regional development initiatives in the last year alone if this royalties sharing scheme had been in place.

LGNZ considers a proportion of the royalties from all mining activity should to be channelled to communities through their local and regional councils. Currently, royalties for petroleum and minerals extraction are paid to a consolidated central government fund which does not flow through to communities. Exacerbating this issue, councils are further disadvantaged because private companies operating on Crown Land do not pay rates. In some parts of the country this involves significant areas of land.

“LGNZ continues to advocate for royalties sharing from extraction. We are pleased to see this policy position from New Zealand First, which supports our goals of strengthening communities and driving economic growth across all of the country,” LGNZ President Lawrence Yule says.

“The royalties sharing would ensure local people and local economies benefit directly from petroleum and minerals extraction in their region. Importantly, royalties sharing would provide local authorities with funding towards additional infrastructure costs they face supporting the presence of extraction industries.”

Community infrastructure such as roads, wastewater and water treatment can be put under great strain during an extraction boom and infrastructure maintenance is challenged when extraction becomes scaled back.

Local authorities also face environmental management costs for extraction permits granted in their jurisdiction, including consenting, compliance, state of the environment monitoring and plan making. Some of these costs are not recoverable, making royalties sharing a necessary contribution.

LGNZ is keen to see this implemented as soon as possible to strengthen regional economic development for the benefit of communities.


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