Rural New Zealand needs to mine its mineral wealth if it is to escape a cycle of economic decline and poverty, according to a report released today.

The New Zealand Initiative-produced report's key finding is that the minerals sector will revive struggling rural economies - but only if the Government reduces the complexity of the Resource Management Act (RMA) and creates financial incentives for local government.

Poverty of Wealth: Why Minerals Need to be Part of the Rural Economy examines the economic landscape and finds that rural sectors are struggling as heartland industries such as timber milling and meat processing are exposed to global competition.

Statistics New Zealand figures revealed the urban economies were growing at a healthy pace last year - Auckland (3.3 per cent), Wellington (1.5 per cent) and Christchurch (up by 6 per cent).

But half of the rural economies shrank over the same period and a further two saw growth stall. Similarly, job creation since 2008 had been concentrated in the regions with large urban centres.

The report says the rural decline is at odds with the mineral resources found in the provinces, which are largely under-explored and under-utilised.

Onshore, New Zealand is a country believed to be rich in gold and silver, coal, industrial metals and non-metallic minerals. Offshore, the oil and gas estate has the potential to make a significant contribution to the economy, the report concludes.

"It is bitterly ironic that the rural regions, as rich as they are in natural resources, are trapped in a cycle of economic decline and poverty," said report author Jason Krupp.

"Yet attempts to encourage mining, an activity that has proven to make long-term contributions to regional economic development, are often avoided by local councils because of the cost, complexity and legal troubles imposed on them by the RMA."

The report shows that while mining has the potential to incur negative macroeconomic and environmental effects, New Zealand is well-placed to offset or mitigate the effects.

"The environment is a large part of our culture and identity, and we are not advocating for it to be dug up and sold whole, but there is potential to loosen the policy settings to allow for greater economic development in the regions.

"There is no reason why New Zealand cannot achieve a better balance around extractive industries, in the same way that other developed countries have done.

"These are minerals that are largely owned by New Zealanders through the Crown, so why shouldn't they get the benefit of them?" A second report containing specific policy recommendations on the issue would be released early next year.

 - Dave Burgess

The Dominion Post


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