Bridges: Speech to AusIMM Conference
26 AUGUST, 2014
Speech to AusIMM Conference
Good morning everyone. It’s a pleasure to be here for the 2014 AusIMM New Zealand Annual Conference – my second since becoming Energy and Resources Minister.
The minerals industry plays a major role in New Zealand’s economy, contributing more than $1 billion to our GDP, producing vital inputs for industry, and adding significantly to our exports.
The minerals sector provides thousands of highly-skilled jobs, and workers across the petroleum and minerals sectors are paid on average $105,000 per annum – more than twice the New Zealand average wage.
As you know, the National Government is focused on growing our economy, raising living standards and providing opportunities for all New Zealanders.
The safe and responsible development of our natural resources is one way in which we can do that.
Staying on top in challenging times
The theme of today’s conference is “Staying on top in challenging times”.
I think the theme of this year’s conference is apt, not just for the minerals industry, but for New Zealand’s economy over the past six years.
If we have learned anything from the recent Global Financial Crisis and national recession, it’s that getting the fundamentals right is crucial to staying on top in tough times.
The National Government certainly understands this.
Looking back, New Zealand was one of the first countries to enter into recession thanks to the poor quality spending and regulation by Government which allowed serious structural imbalances to build up over several years.
When National took office, we moved decisively to get the fundamentals right — removing the red tape getting in the way of business and investment, while significantly reducing additional government spending and demanding better public services from government agencies.
Our approach is paying off.
If we look at most indicators that matter, we’re moving forward as a country.
New Zealand’s economy grew by 3.8 per cent in the year to 31 March — one of the five fastest growing economies in the developed world, and a far cry from the recession we inherited in 2008. This growth includes a 6.3 per cent increase in mining activity.
Wages are rising faster than inflation, our unemployment rate is coming down – 5.6 per cent compared to 7.3 per cent in 2008; our balance of payments deficit is less than half what it was six years ago; and we are on track to budget surplus next year, and to post increasing surpluses in subsequent years.
New Zealand is in a good position.
If we look at the minerals sector, I think we can all agree that it’s not an easy time right now, both here in New Zealand and around the world.
Investors in the minerals sector are being selective about the companies they invest in.
And opponents have been quick to dismiss mining as a boom and bust industry that’s not deserving of investment.
But it’s important to remember that all markets are cyclical – we only need to look at dairy prices at the moment. Like any industry, investment in minerals can fluctuate as commodity prices rise and fall.
In the long term, the Government is confident that the mining industry will continue to experience growth.
And our focus is on supporting the industry by getting the basics right.
The Government cannot control international commodity prices but they are just part of what affects a company’s bottom line.
The cost of doing business has a significant impact.
Business Growth Agenda
This is where the Government’s Business Growth Agenda comes in.
Its focus is on making it easier for businesses to get on with the job.
Improving the way we use and manage our natural resources is a key focus of the Business Growth Agenda.
We want to ensure we use our resources productively, while maintaining our high quality environmental, and health and safety standards.
Getting the basics right has seen us cut red tape by making 150 amendments to simplify and streamline the RMA.
These changes have significantly improved the consenting process. Now, 97 per cent of consents are processed on time, a vast improvement from just 69 per cent in 2008.
We’ve put in place a world-class regulatory regime, and implemented all of the recommendations from the Royal Commission on the Pike River Coal Mine tragedy, including:
• establishing the independent Health and Safety regulator, WorkSafe New Zealand
• establishing a High Hazards Unit with an increased inspectorate to oversee health and safety practices on oil and gas platforms, in geothermal installations, mines, tunnels and quarries
• passing a comprehensive new set of mining regulations into law, which are now being implemented.
• and we are looking at health and safety in New Zealand workplaces as a whole through the Working Safer reform package.
Outside of health and safety, we’ve streamlined the permitting process by amending the Crown Minerals Act to establish a two tier system for minerals permitting.
This puts a greater focus where it is needed, on the larger Tier 1 permits, while making it easier for the smaller Tier 2 permit holders to get their applications done in a more timely fashion.
NZP&M are now in the process of splitting its permitting team and getting this change underway.
We’re also improving the service for industry: NZP&M are currently developing a permit management system that will allow permit applicants to apply online.
All of this will cut down on paperwork and time.
We’re also actively working to promote New Zealand on the world stage to attract more investment and encourage more exploration in the sector. This is what leads to new discoveries and creates jobs.
A major focus for the Government in this regard has been on acquiring minerals data.
Ensuring international minerals explorers can access geological data is key to showing the range of mineral resources New Zealand has to offer and getting them here to explore.
Since 2012, we have invested $4.4 million in aeromagnetic surveys of the West Coast and Northland.
And a further $8 million has been earmarked in Budget 2014 for data gathering projects across petroleum and minerals over the next four years. Options are currently being considered, so watch this space.
In addition, we’ve established a Regional Investment Attraction programme through New Zealand Trade and Enterprise which identifies investment opportunities and aims to develop a compelling ‘pitch’ for potential investors.
Last month we released fourteen regional investment profiles, which highlight the potential for minerals development in regions like the West Coast.
This work has meant that, despite international commodity prices, mineral exploration in New Zealand continues to be strong.
Last year total minerals exploration expenditure across New Zealand was more than $46 million – only slightly below the record $49.5 million in 2012.
New Zealand Petroleum and Minerals continues to see healthy levels of permitting.
There are around 1000 current mineral prospecting, exploration and mining permits across the country with a further 156 permit applications being processed by NZP&M. A total of 357 mineral permits and permit change applications were granted last year.
The three recent minerals tenders for metallic minerals in Northland, Epithermal Gold in the central North Island, and the Platinum tender in the South Island resulted in 11 mineral exploration permits to five companies – with a total estimated exploration spend of more than $11 million in the first three years.
If this initial work is successful that could increase to $22 million by the end of the five-year permits.
This is great news for the industry and a sign of the opportunities our minerals sector holds.
The tenders, along with NZP&M’s other promotions work, have helped raised New Zealand’s international profile as a minerals destination and attracted further interest.
For example, Waikato Gold Ltd, a subsidiary of the large Canadian minerals explorer Eurasian Minerals Inc, has applied for mineral exploration permits in the central North Island.
We are also seeing interest in offshore mining in New Zealand.
Overall, I believe we’ve made significant progress to improve our regulatory regime, streamline permitting times and make it easier for permit holders and applicants to get on with the job.
Our challenge over the next three years is to lock in the gains we’ve made by sticking to our course.
National will continue its focus on cutting red tape by reducing costs and delays, and improving certainty for business.
Further reform of the Resource Management Act is one way which we can do that.
As mining professionals you will be well aware of the important role the Resource Management Act plays in terms of your business, the economy and the environment.
And I’m sure I don’t need to tell you that National is one of the only parties in Parliament that believes change is needed.
You will be interested to know that one of National’s proposed changes involves improving the submissions and appeals processes for resource consents by ensuring submissions are targeted to the issues under consideration.
Councils would be required to specify the reasons consent is needed and the particular effects on the environment that triggered a public notification.
The content of appeals and submissions will be limited to these matters, with all others required to be struck out.
This will increase certainty and should reduce the time and costs associated with appeals.
The proposed reforms will also make planning documents easier to use, with the creation of a single resource management plan per district.
This plan would be the only document you would need to look at to understand all the rules that apply to you and your business.
This will make information easier to access and will increase certainty for businesses.
In closing, I would like to thank you once again for inviting me to speak to you today.
It’s not an easy time for the sector, but we are working to make it easier for permit holders and new applicants to get on with the job in a safe and environmentally responsible way.
The minerals sector and its people make an important contribution to New Zealand’s economy. And I am confident that the changes we have made will ensure the sector continues to make a strong contribution to New Zealand’s economy well into the future.