Councils want to work with Government to ensure communities get a slice of the growing pie

14 November, 2012

The local government sector wants to work with the Government to ensure affected communities around the country can directly benefit from growing oil, gas and minerals royalties says Local Government New Zealand.

LGNZ recognises and supports the Government’s aim to grow the economy, and the work of the extraction industries is an important aspect of this.

Presently, royalties for petroleum and minerals extraction are paid to a consolidated Government fund. LGNZ is advocating a proportion of the royalties be channelled to affected communities via local and regional councils.

LGNZ this afternoon spoke to its submission on the Crown Minerals (Permitting and Crown Land) Bill to Parliament’s Commerce Select Committee. LGNZ agrees with much of the content of the Bill but says some changes are needed to help communities share in the benefit of petroleum and mining activity and for the costs of the extra infrastructure local authorities must fund to be fairly met. At present, the extra infrastructure costs fall to ratepayers. A more inclusive approach would greatly aid community support for mining activity.

LGNZ President, Lawrence Yule, says the massive ups and downs associated with extractive industries mean a community’s infrastructure is typically put under great strain during a boom period. On the other hand, it’s challenging to maintain that infrastructure – such as roads, wastewater and water treatment – to support other economic activities when mining and petroleum extraction is scaled down.

“LGNZ supports properly regulated petroleum and minerals extraction, but the nature of the related industries and the fluctuation in commodity prices is such that communities are likely to experience massive ups and downs, which both bring their challenges. This can lead to problematic ‘drive in, drive out’ based economic growth.

“We want to talk with the government about how we can ensure local people and local economies, which are an essential part of the fabric of this country, are given a fair deal, and benefit directly and that fair costs are met related to work of this sort in communities’ back yards,” says Hon Harry Duynhoven, Mayor of New Plymouth District Council.

At present, councils are not legally entitled to strike rates on land owned by the Crown. If it is private land, rates are payable by petroleum and minerals extraction companies. On the West Coast, for example, where much of the extraction industry is located on Crown Land, private companies operating on that Crown Land currently don’t pay rates but private companies down the road on private land pay their share.

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