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Phil Heatley

25 September, 2012

Introduction of Crown Minerals (Permitting and Crown Land) Bill

 

Mr Speaker, I move that the Crown Minerals (Permitting and Crown Land) Bill be now read a first time. I nominate the Commerce Committee to consider the Bill.

At the appropriate time I intend to move that the Bill be reported to the House by 30 January 2013.

This Government’s Business Growth Agenda is an ambitious programme of work that will support New Zealand businesses to grow in order to create jobs and improve New Zealanders’ standard of living.

Natural resources represent a key component of this agenda, with a key focus of the work programme on a review of the regulatory regime for Crown-owned minerals. This review also sees through an action from the Petroleum Action Plan of November 2009, which aims to ensure New Zealand is able to maximise the gains from the responsible development of our oil and gas resources.

The production of oil and gas and the mining of minerals is the backbone of many local economies.  Taranaki’s petroleum industry employs almost 4,000 people directly, with a further 1,500 jobs created by the flow on effects of sector development in the region.

Mining generates around a third of household incomes on the West Coast of the South Island.  Since 2008, the mining sector has generated almost $2 billion in royalties paid directly to the Crown to fund essential services. Collectively, oil, gas and minerals contribute over $4 billion in GDP. Crude oil is New Zealand’s fourth-largest commodity export.

Proposed amendments to the 1991 Crown Minerals Act are intended to encourage the responsible development of Crown-owned minerals so that they contribute even more to New Zealand’s economic development. They will also streamline and simplify the regime where appropriate, bring it into line with the regulatory reform agenda, and make it better able to deal with future developments.

The Bill will insert a purpose statement into the Act which demonstrates the Government’s commitment to growth of the sector. The purpose of the Act will be “to promote prospecting for, exploration for, and mining of Crown-owned minerals for the benefit of New Zealand, by providing for:

 

  • the efficient allocation of rights to prospect for, explore for, and mine Crown-owned minerals
  •  the effective management and regulation of the exercise of those rights
  • a fair financial return to the Crown for its minerals.”

 

The effective management and regulation of prospecting, exploration of, and mining of Crown-owned minerals will be provided for through the introduction of a two-tiered system for permit management. Tier 1 operations, which include petroleum, metallic metals and phosphate permits, will be subject to a more hands-on, co-ordinated management regime.

This will enable regulatory effort to be focused on the high-value, higher-risk minerals, whilst providing for a simplified regime for lower-value, lower-risk operations, improving efficiency for both regulators and permit holders.

Regulatory attention will be focused on key industry work programme deliverables that have the potential to generate significant value to New Zealand. This will reduce focus on administrative processes, with attention turning to more and flexible oversight of permit holders’ work programmes. Equally, tighter controls are introduced so that when non-compliance arises, swift and decisive action is possible.

The Crown Minerals Act is not primarily about health and safety, or environmental regulation. This maintains the independence of health and safety, and environmental regulation to completely avoid possible conflicts between government’s dual roles of promoting resource exploration and production and regulating the effects of those activities. This fundamental premise was introduced in 1991 when the permitting regime was separated from environmental consenting, and is being retained in the current amendments.

However, current best practice suggests that an initial assessment of permit applicants’ health and safety and environmental management capability, without replacing or duplicating the stringent requirements under relevant legislation, will ensure permits are awarded only to applicants equipped to give full effect to their work programmes. The Bill provides for this. This will cut out the processing of applications we know will not meet our high environmental and safety expectations or provide a return to New Zealand for its mineral resources.

Whilst regulators retain distinct functions, they must work together to ensure operators are held to the high standards expected in New Zealand.

This Bill also introduces the requirement for Tier 1 permit holders to attend annual work programme review meetings attended by other regulators. This will be supplemented by provisions to allow sharing of information across agencies if it would assist them in their role of regulating activities in the sector.

Good operators maintain positive relationships with communities and local iwi because it makes good business sense. This Bill will encourage such behaviour. It includes a requirement for permit holders to report on their engagement with iwi and hapū. This requirement sends a strong signal to permit holders of the Government’s expectations for community, and specifically iwi engagement. This expectation will be supported at an operational level by New Zealand Petroleum & Minerals.

The Waitangi Tribunal’s report on management of the petroleum resource identified a number of gaps in how the Government engages with Māori on petroleum issues. I note that the Tribunal recognised that the legislation is sound, but recommends a number of changes to offer even greater protection to Māori interests. The Tribunal’s report has been taken into account in the review of the Crown Minerals regime, with many of the Tribunal’s recommendations picked up in the minerals programmes, and operational policies of NZP&M. Taken as a whole, this represents a substantial improvement and I do not expect to make further changes in response to the Tribunal’s report.

The Bill also implements changes agreed as part of the stocktake of Schedule 4 of the Crown Minerals Act in 2010. To this end, the Bill provides for automatic inclusion of certain areas of land into Schedule 4, and updates the processes around approval of mineral-related access arrangements over Crown land. Notably, economic considerations are introduced into decision-making criteria for granting access to conservation land for mining activities.

A review of the royalty rate applicable to certain minerals operations is currently under way, with proposals due for release in the coming weeks. The Act, once amended, is to make it clear that the royalties that apply to a mineral at the time a permit is granted will be grandfathered for the life of the permit.

The Bill improves the process for preparing minerals programmes under the Crown Minerals Act, and clarifies the status of these programmes. Minerals programmes set out and describe how the Minister or chief executive will interpret and apply the Act in relation to Crown-owned minerals. New programmes for petroleum and minerals will be released for public consultation shortly. It is essential that the committee, industry, and the public can see how the regime will work as a whole in order to give full consideration to this Bill.

Finally, the B ill sets out provisions for transitioning existing permit holders to the new regime.  I want to ensure the high expectations for Tier 1 permit holders, and streamlined processes for Tier 2 permit holders, apply to existing permits, whist minimising disruption to existing activities.

I am also determined to ensure the sector is not hampered by unsafe protest actions by a small but vocal minority.  I have asked officials to look into ways we can protect vessels from such behaviour and report back some recommendations through the Select Committee process.

Mr Speaker, this Bill is critical to the future responsible development of New Zealand’s oil, gas and mineral resources and will ensure the future contribution of these resources to the New Zealand economy. 

I commend this Bill to the House.