Crown Minerals (Permitting and Crown Land) Bill

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, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 188 and 191(1)(b) and (c).

The Government’s Business Growth Agenda is an ambitious programme that will work to 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 being on a review of the regulatory regime for Crown-owned minerals. The review also sees through an action plan from the Petroleum Action Plan of 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, and a further 1,500 jobs are created by the flow-on effects of sector development in the region. Mining generates about one-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 will 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 that 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 rights to prospect for, explore for, and mine Crown-owned minerals, and for the effective management and regulation of the exercise of those rights, and for a fair financial return to the Crown for its minerals.

The effective management of regulation of prospecting, exploration, and mining of Crown-owned minerals will be provided for through the introduction of a two-tiered system for permit management. Tier one operations, which include petroleum, metallic minerals, and phosphate permits, will be subject to a more hands-on, coordinated management regime. This will enable regulatory effort to be focused on the high-value, higher-risk minerals, while 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 will have the potential to generate significant value to New Zealand. This will reduce focus on administrative processes, with attention turning to more 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 the Government’s dual roles of promoting resource exploration and production and also regulating the effects of those activities. This fundamental premise was introduced in 1991, when the permitting regime was separated from environmental consenting. This 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 that permits are awarded only to applicants who are equipped to give full effect to their work programmes. The bill provides for this. This will cut out the processing of applicants that we know will not meet our high environmental and safety expectations or provide a return to New Zealand for its mineral resources.

Although regulators retain distinct functions, they must work together to ensure that operators are held to the high standards expected in New Zealand. This bill also introduces the requirement for tier one permit holders to attend annual work programme review meetings that are attended by other regulators. This will be supplemented by provisions to allow for the sharing of information across agencies if it will 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 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 and Minerals.

The Waitangi Tribunal’s Report on the 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 it 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 New Zealand Petroleum and Minerals. Taken as a whole, this represents a substantial involvement, and I do not expect to make further changes in response to the tribunal’s report.

The bill also implements changes agreed to as part of the stocktake of schedule 4 of the Crown Minerals Act 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 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 minerals will be released for public consultation shortly. It is essential that the Commerce 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 bill sets out provisions for transitioning existing permit holders to the new regime. I want to ensure that the high expectations for tier one permit holders and streamlined process for tier two permit holders apply to existing permits, whilst minimising disruption to existing activities. I am also determined to ensure that 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 unsafe behaviour, and to report back some recommendations through the select committee process.

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.

I want to start off by saying that there is much in this Crown Minerals (Permitting and Crown Land) Bill that is very, very commendable. There are also some things that do concern the Labour Party. If I can start on the positive, there is a lot in here that streamlines the system. I think that that will provide a lot more certainty for everyone involved in the process, whether that be industry or whether that be those members of the community who want to have a say in mining projects that are going ahead, particularly in the exclusive economic zone, which is where a lot of the public concern is often around and where a lot of the contention exists.

I think that one of the things that members are going to need to look at very seriously at the Commerce Committee is whether this piece of legislation does address a number of the concerns that were raised when the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill was going through the Local Government and Environment Committee. As the Minister of Energy and Resources well knows, there are many, many pieces of legislation that sit on top of each other, all governing the same activity, all for different reasons, and it is a matter of making sure that nothing falls through the cracks between those pieces of legislation. Not only do we have this Crown minerals legislation, which issues the permits that allow for the exploitation of the resources, but also we have the exclusive economic zone legislation just recently passed into law, which monitors and attempts to mitigate the environmental impacts of any economic activity that occurs in the exclusive economic zone, including, but not restricted to, oil and gas exploration and mining. We have health and safety legislation, we have biosecurity legislation, and we have maritime legislation, which are triggered in the event of anything going wrong.

It is for the Commerce Committee to determine whether or not this piece of legislation is going to adequately compensate for the exclusive economic zone legislation, because when we were at the select committee on that bill a lot of what we heard was: “Well, you don’t need to worry about this, because it will be picked up in the Crown Minerals (Permitting and Crown Land) Bill.” Certainly, I know that I have had discussions with the Minister, and it appears that a lot of those concerns have been picked up, and it will be a matter of going through it far more carefully at the select committee.

Can I say one other thing, and that is that I am very appreciative that this piece of legislation is getting a decent time at the select committee—unlike the previous one that I mentioned. It really is important on these very technical, process-driven bills that we get the time to go through and see what that looks like. We also have more of an idea now what the regulations are going to look like for the exclusive economic zone legislation, which we did not have when that particular piece of primary legislation was going through. So we are in a far better-informed place to make decisions around this.

The introduction of a two-tier system certainly seems sensible, as does the idea of pre-vetting applicants so that those who simply are never going to make it through are told up front, as early as possible, not to bother. Hopefully, that may allay the concerns of some of the people who are worried about what, I think, you can probably accurately call the lowest common denominator operators. It may be that at the very first hurdle they will be told “No, do not bother.” Then we will not go through a very expensive and lengthy process of Resource Management Act consents and consents under this legislation, where community organisations, where members of the community, and where environmental groups spend a lot of their time and money opposing permits that were probably never realistically going to get through in the first place.

Where our concerns lie is again around the division of control of the conservation estate. We were not sure whether that was going to be in this piece of legislation. It is unfortunate that it is, because that has been a big issue. The Minister of Conservation is, rightly, the person who should have the say on concessions on the Department of Conservation estate. A lot of the criticism of the treatment of mining on conservation land thus far has been that it does get an easier ride than, for example, tourist activities that go through the process under the Conservation Act, whereas mining goes through a process, under this particular piece of legislation, that does not involve community consultation.

The Government did promise that community consultation would happen for concessions for mining on Department of Conservation land. I note that it goes part of the way in this piece of legislation. The Minister of Energy and Resources and the Minister of Conservation have joint responsibility for deciding whether or not it goes to public consultation. That is not quite what was promised. What was promised was that, just like any tourism operation that wants to get a concession on Department of Conservation land, mining would also have to go through a similar process, where the public could have their say—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.