Hooton on the Norway model

June 24th, 2013 at 10:00 am by David Farrar

writes at NBR:

In the 1960s and ’70s, ’s mainly left-wing governments decided to make their country of four million rich.  In 1963, they asserted sovereign rights to North Sea natural resources; exploration began in the mid-’60s; a state-owned petroleum company, Statoil, was launched in 1972; and the profits, taxes and royalties later put into the government’s petroleum fund, set up in 1990.

The fund is now worth approximately NZ$860 billion, or around $172,000 per Norwegian.  By 2030, it is forecast to be worth as much as NZ$4 trillion, or around $800,000 per Norwegian, and exists primarily to pay generous superannuation.

Meanwhile, Statoil has evolved into a classic mixed-ownership model company, with the government owning two thirds and the remainder trading on the Oslo and New York stock exchanges.  It is now the world’s 38th largest public company with a market value of NZ$98 billion and profits of $15.6 billion.  This is more than the entire NZX.

The thinking behind Norway’s approach is that a country’s natural reserves are intergenerational property, they are worth nothing under the ground, and the industries are inherently unsustainable: eventually, even if far in the future, the field will run dry.

The best strategy, therefore, is to get it out of the ground as soon as possible, monetise it, but avoid an economic sugar rush by investing the money for future generations.

As opposed to the competing strategy of never ever dig anything up or drill for anything.

is already New Zealand’s fourth largest export earner, after dairy, meat and wood. The government collects around $400 million in royalties each year, plus another $300 million in company tax.  The present value of future royalty income alone, just from known reserves, is an estimated $3.2 billion.

Relatively conservative MBIE studies suggest that, if exploration continues to grow at current rates, royalties could yield another $5.3 billion in present value terms.  If there is faster growth in exploration, the estimate is $9.5 billion.

Even that may be conservative.  It has been suggested the value of our offshore oil reserves could be in the trillions.  Solid Energy isn’t a very good precedent right now, but New Zealand could choose the Norwegian Statoil model to secure that wealth.

Currently, oil royalties just go into the consolidated fund, to pay for everything from welfare payments to Wellington arts festivals.

The risk Mr Weake identifies is that, if large oil deposits were found, the temptation for a government would be to put the money into something to help it through the next election.  He argues we should establish cross-party agreement now on what we would do with that wealth.

He is surely right.  God knows what decisions a desperate John Key and Bill English would make – let alone a desperate David Shearer and Russel Norman – if we struck oil in the lead up to a close 2017 re-election campaign.

I am sure Russel Norman would refuse to spend any money earnt from dirty oil!

So here’s some friendly advice to the minister: have a chat with Mr Weake and his industry colleagues, take a trip to Oslo and the North Sea, face down the crypto-anarcho-neosyndicalist Greens, achieve consensus with Labour, and get New Zealand’s equivalent of Norway’s oil fund and even Statoil up and running before the election.

One could call it Kiwioil!

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54 Responses to “Hooton on the Norway model”

  1. Albert_Ross (245 comments) says:

    The alternative of never ever digging up anything isn’t the only alternative; another would be to leave it in the ground until the world price of fossil fuels has gone up as other stocks around the world run dry, and then dig it up. The judgement call is whether we think we can increase our wealth more by converting oil into money, and having the Government invest the money, now.

    The UK government, specifically Mrs Thatcher, is often criticised for not having taken the same approach to UK oil and gas revenue; but it needs to be remembered that Norway had the advantage of not being heavily indebted, and helplessly addicted to public spending, as 1970s Britain was. And sovereign wealth funds don’t always do so well either; some have lost money big time.

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  2. Redbaiter (7,522 comments) says:

    “Oil is already New Zealand’s fourth largest export earner, after dairy, meat and wood. The government collects around $400 million in royalties each year, plus another $300 million in company tax. ”

    The idea Hooton is promoting here is to rob oil companies to sustain socialism.

    Oil welfare is destroying Norway’s social fabric just as social welfare has destroyed NZ’s. Leave private companies alone. They contribute enough to the good of the community without being plundered by socialist governments. The principle is immoral and the outcome is negative.

    Welfare whether it is sourced from looting the middle class or from looting oil companies is always a bad idea.

    How oil welfare is threatening Norway’s future-

    http://www.reuters.com/article/2013/03/24/us-norway-oilwealth-idUSBRE92N07M20130324

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  3. kowtow (7,583 comments) says:

    And as North Sea oil runs out the Norwegians are buying into Canadian oil sands big time.

    You’d be mad not to.

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  4. rouppe (914 comments) says:

    I have always wondered why we let other people make a profit off the oil and gas reserves in NZ. We should be able to take the profit and the royalty (which is just part of the profit anyway).

    If reserves similar to what Norway has built up could be achieved here, this truly would be Godzone. Unfortunately politicians seem to operate on the basis that all revenues must be spent immediately, and if there isn’t anything intergenerational to spend it on, they’ll dream up another WFF or something to waste it on.

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  5. Simon (680 comments) says:

    Why are the Greens always a reference point for National Party shrills? Is it to mask National’s own statist retardation for the sheeple.

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  6. anonymouse (694 comments) says:

    One could call it Kiwioil!

    Solid Energy tried to convince the government about allocating all new oil permits to a state owned player with the “Natural Resources Company” proposal, it didn’t end up too well for them….

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  7. Keeping Stock (10,092 comments) says:

    God forbid that a nest-egg of cash ever be accumulated that Labour and the Greens could get their mitts on. The golden spending years of Michael Cullen would pale into insignificance once this current mob got spending.

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  8. campit (458 comments) says:

    Kiwioil – agree!

    In the interim perhaps the royalty revenues could go into the NZ Superannuation Fund. As Bernard Hickey points out, the decision to suspend contributions has proved costly ( admittedly with the benefit of hindsight). Perhaps now is the time to start reinvesting, without borrowing, by directing royalty revenues into it?

    Figures released by the fund under the Official Information Act show the fund would now be worth $32.7 billion if the government had continued putting money into it.

    That includes $6.9 billion of contributions net of tax and an extra $3.2 billion of investment returns and compounding interest.

    The irony is that borrowing to invest would have meant the Government’s net debt would now be lower than it is, because investment returns of 8.7 per cent are higher than government bond interest rates of 3.3 per cent.

    Treasury’s own budget forecasts show the fund would be worth $182.3 billion by 2040/41 if contributions resumed next year, rather than the $153.4 billion it would be with the current extra eight years of contributions holiday. This doesn’t include the effect of the four years of contributions already missed.

    This means Key’s decision in 2009 to not borrow $23.3 billion over 12 years will have cost my daughter’s generation at least $40 billion in lost investment returns by 2040.

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  9. campit (458 comments) says:

    * one caveat to the Kiwioil idea is that the consequences of setting up an oil company and then not finding oil will be severe for the taxpayer. Petrobras walked away because they couldn’t find any commercial levels of oil. Might be best to let the private sector take the risk on this one, or at least only form the company when commercially viable quantities are found.

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  10. peterwn (3,144 comments) says:

    rouppe – it all comes down to risk. The NZ Government tried this (Petrocorp – that was the era of -corps) in the early 1980′s and got its fingers burnt. NZ is particularly nasty for off-shore exploration, it is a big gamble. Norway was lucky – once some North Sea reserves were found, the risks for the Norweigen Government was far less than it would be for the NZ Government exploring in areas outside Taranaki.

    Another problem is NZ investors tend to have little appetite for speculative type investments – too many fingers burnt and a nanny-state problem (trade-off between protecting little old ladies vs letting people who know what they are doing have a go). Toronto is generally regarded as the place to go to raise money for exploration and mining – Kiwis are just not interested.

    However there is one opportunity being advanced at present open to Kiwis. It hopes to have mining consent granted soon and environmental consent early 2014. Gareth Hughes has indicated a dislike for this project, which given its nature, would seem to indicate Gareth does not like any exploration / mining project full stop. If it comes to a crunch, Labour should stare Greens down on this one.

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  11. Kleva Kiwi (281 comments) says:

    So your advocating a think big project and more government ownership?
    Are you sure you are pro right DPF???
    Or are your true colours shining through now…

    We just started selling down stakes in companies government has no place being in, and now you want them to open up the country to further risk and nationalise another business?

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  12. gump (1,474 comments) says:

    @Redbaiter

    Did you even read the article that you linked?

    National unemployment at 3%, a budget surplus of 12%, citizens choosing to work fewer hours to spend time with their families. And you have the effrontery to claim that oil revenue is destroying the Norwegian social fabric???

    You’re crazy. You are literally insane.

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  13. Griff (6,703 comments) says:

    peterwn
    this?
    http://rockphosphate.co.nz/share-offer/

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  14. bhudson (4,734 comments) says:

    National unemployment at 3%, a budget surplus of 12%, citizens choosing to work fewer hours to spend time with their families.

    What it does indicate is that the oil revenues are not required to meet current expenditure commitments. In which case it may be eminently sensible to squirrel them away for the future.

    NZ could not say the same. And Net Present Value calculations would say that putting oil/mineral revenues aside for the future is less rational than using that revenue to meet current commitments. After all, a dollar today is deemed to be worth more than a dollar in the future.

    Of course we could always reduce spending at the same time. Would the people be happy to give up their WFF, their interest free student loans,…?

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  15. Tom Jackson (2,458 comments) says:

    Hooton recommending the far left Norwegian state?

    Has he no shame?

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  16. RRM (9,427 comments) says:

    As new Zealand is a small, poor nation with minimal military power, I would have thought it made sense to extract and monetize any oil reserves asap, before it occurs to anyone that it might be worth invading us to obtain the oil?

    (And LOL at “looting oil companies…” anyone would think statoil forced companies to become involved at the point of a gun.)

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  17. Redbaiter (7,522 comments) says:

    “I have always wondered why we let other people make a profit off the oil and gas reserves in NZ. We should be able to take the profit and the royalty (which is just part of the profit anyway).”

    The immorality and foolishness of socialism displayed so starkly in the words of an apparently psychotic looter.

    Rouppe, do you not ever have any misgivings about the immorality of what you propose?

    You can call it tax, royalty, whatever, but the bottom line is that it is theft.

    It is theft.

    Nothing more. Nothing less.

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  18. Redbaiter (7,522 comments) says:

    “Hooton recommending the far left Norwegian state?”

    Yes, he never has an argument that confronts the ideology of socialism.

    He always just wants to tamper with the settings.

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  19. Kea (11,878 comments) says:

    Norway is another example of how oil benefits everyone. Globally our standard of living has risen immeasurably thanks to this wonderful organic product, and that is aside from the wealth created by its harvest and sale. NZ needs to take urgent action to use this resource. It is absurd we buy oil from overseas while not using our own.

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  20. RRM (9,427 comments) says:

    You can call it tax, royalty, whatever, but the bottom line is that it is theft.

    It is theft.

    :-D Ooh look! I found something shiny lying on the ground. That must mean it’s mine. I could sell this for a sweet profit.

    :mad: Wait – why is Mr Redbaiter tellimg me to “get off his lawn” and demanding I return “his property” or else “pay him for it”…? How dare he try to COMMIT THEFT in this way?? What a dirty socialist!

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  21. redqueen (452 comments) says:

    We could call it Whaleoil…just to piss the greens off and for a sense of irony… :)

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  22. dime (9,367 comments) says:

    GUMP – did you read it?

    Wage costs are up 63 percent since 2000, about six times more than in Germany or Sweden, while the employment rate, adjusted for part time work, is 61 percent, below rates anywhere in the Nordics and even below Greece, the central bank says.

    Still, unemployment is a barely visible 3 percent as more prefer part time work.

    “Why should I work more when I don’t have to?” said Elise Bakke, 36, who recently cut her work day at a major telecom firm to 6 hours.

    “Maybe it’s luck, maybe we earned it, it doesn’t really matter. We have the money to live the Nordic life: go to the cabin, ski, bike, spend time with the children.”

    The government recently warned that unless working hours are increased by 10 percent over time, the state will eventually start eating into its savings. The central bank also warned that the welfare model is simply encouraging people to leave the labor market.

    “The number of working hours for full time employees in Norway have fallen by 270 hours a year since 1974,” says Jostein Hansen, director of employment policies at Norwegian Hospitality Association. “Norwegians should follow Iceland’s example and work 100 hours more a year.”

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  23. dime (9,367 comments) says:

    A state owned oil company.. hmmm how to do it so we don’t end up totally fucked.

    Imagine what a Greens govt would be capable of with a couple of hundred billion in the bank. scary.

    A real govt in control would be nice. low tax, huge growth through investment. keep the welfare scam the same as it is. let the gap between those who work and the lazy increase.

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  24. Nick R (497 comments) says:

    Have I go this right? DPF is advocating that NZ oil exploration and production be conducted exclusively by a State owned monopoly?

    I’m sure it would be at least as successful as Solid Energy.

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  25. kowtow (7,583 comments) says:

    redqueen

    It used to be whale oil. And could still be.

    By the time petroleum runs out ,thanks to the envirowhackos there’ll be massive numbers of whales so we can harvest them again.

    Peak oil ? No problem.Plenty of whales to kill.

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  26. flipper (3,537 comments) says:

    Mr Hooton is somewhat late in presenting his observations.
    The New Zealand Initiative covered it some two weeks ago…….

    ” …. Norway? No way!

    Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
    It is one of those ideas that come up again and again without ever being properly scrutinised – that a sovereign wealth fund (SWF) like Norway’s is a fantastic idea that deserves to be copied elsewhere, even in New Zealand.

    Last week, the National Business Review reported that Methanex New Zealand chief executive Harvey Weake is making the case for a Norwegian-style SWF. Government royalties from new oil and gas finds should go into this new fund to be available to future generations rather than for current consumption.

    Aside from the questionable wisdom of putting money into a separate vehicle while the budget is in deficit, or indeed while the government has any net debt, there is another reason to be sceptical of the proposal. The Norwegian SWF does not make much sense even for Norway.

    Norway is a spectacularly rich country, mainly thanks to its oil and gas reserves. Unfortunately, the high proceeds from this sector have led to complacency in other areas. In particular, state spending is high, and adjusted for petroleum, the government is running substantial budget deficits to sustain Norway’s generous welfare state.

    As Norway’s oil boom will eventually come to an end when the country’s reserves run out, the Norwegian government has established a fund to secure Norway’s welfare state beyond the oil era. Whether this measure will in fact future-proof Norway’s competitiveness is an entirely different question.

    Rather than thinking how welfare can continue after oil, perhaps the Norwegians should have thought more about the structure of their economy after the resources boom. It is in this area that the Norwegian model shows weaknesses.

    Norway’s labour market is highly regulated, many industries are state owned, and both taxes and cost of living are high. Taken together, these factors negatively impinge on Norway as a place to do business. Rather than stashing away the money from the resources boom in its SWF and investing in a wide range of companies abroad, the Norwegians could have made their own country a more attractive place for households and investors alike.

    If all the money currently going into the fund went to tax cuts, Norway would become a tax haven attracting enormous foreign investment; encourage entrepreneurship; and ultimately, diversify the structure of its economy. This would be a better insurance against the inevitable end of the boom.

    The idea of copying the Norwegian example of an SWF in New Zealand is simple, tempting, attractive – and wrong. ”

    My point?

    Let us note, in passing, that Hooton wrote on Norway with less than full knowledge – and did so AFTER HARTWICH had published.

    I do not suggest anything untoward. But I would rather read Hartwich than Hooton.

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  27. dime (9,367 comments) says:

    good to see that dude is on the same page as Dime :D

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  28. flipper (3,537 comments) says:

    DIME…
    Yep.
    You might recall that a few weeks ago Hartwitch demolished both silly Bradford (That is ridiculous. You are talking rubbish)and idiot academic Raymond Miller on Q+A.
    One hears that the left wing producers (Watkin et al) were unhappy, and will not be inviting him back :)

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  29. bhudson (4,734 comments) says:

    ^^ That’s a real shame. He should be a permanent fixture on that panel. They could then invite one additional interested party from each of the right and the left – a panel of 4 would be manageable.

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  30. s.russell (1,559 comments) says:

    The best guesses from the experts seems to be that NZ has lots and lots of oil and gas. Unfortunately their best guesses are that the vast majority of it is hard to reach and so expensive to extract that no-one will want to. Meaning all this is rather a moot question.

    But supposing we did find a Norway-like oil field. What then? The question is not simply ‘what is the smartest thing to do with the revenue?’ But also ‘what is politically palatable in a democracy?’

    The aim is to find the most responsible thing to do which can also get a sufficient political consensus to be sustainable through inevitable changes of Government. A fund like Norway’s might not be the smartest thing, but it is probably the smartest thing that the people will allow politicians to get away with.

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  31. Matthew Hooton (124 comments) says:

    Redbaiter, and others:

    The oil, especially oil deep out at sea, belongs to the state. This was a major issue during the foreshore and seabed dispute when Maori claimed they might own some oil. I have not checked this, but I expect redbaiter would have argued the whole foreshore and seabed (and therefore everything under it) was owned by the Crown (ie the state). In any case, the Crown nationalised all oil in 1937. Prime minister Holland, who I admire for similar reasons to redbaiter, did not reverse this. Therefore, the value of any oil does not figure in our property values. When we bought or sold our homes, commercial property or farms, we all assumed the state owned any oil that might be found under it.

    Therefore, no oil company owns the oil so no question of confiscation or socialism, as redbaiter suggests, arises – especially oil under the sea where Maori could not possibly have a genuine claim.

    Therefore, the only question is what the state should do to maximise the value of the oil it already owns.

    I have suggested a model – and I could be wrong. But it is silly to say what I suggest is socialism. I say to the Crown: drill baby drill!

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  32. flipper (3,537 comments) says:

    S.Russell…

    Since 1970, or thereabouts, its has been known that NZ has massive (but not yet quantified in terms of BBLS) off shore oil and gas fields within our economic zone.

    Some will be recoverable easily enough using existing technology. Most, it seems, will require advances in existing or new technology. Some estimates on the Great Southern Basin that I have seen put NZ, potentially, in the IRAQ/IRAN category. Would it not be luvverly ?

    But the whole exercise is cost, rather than then adequacy of supply, driven.

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  33. Redbaiter (7,522 comments) says:

    No the oil belongs to those who risk life and limb and fortune to find it and bring it to surface and ship it or pipe it and refine it and truck it and then sell it. The state merely “licences” these people to carry out these activities.

    The government takes a slice of all of that action without once participating in any risk.

    And the government is just another word for the people of NZ. So what you are proposing is to turn every NZer into a looter who wants to take from the oil companies what is rightfully theirs. I am not one of those people. I do not want any government to loot free enterprise and give me a share of the proceeds.

    This is not new or radical thinking,

    In fact it goes right back to the Little Red Hen.

    But wait- there’s more.

    The government gave tax breaks to the film industry. Its therefore an irrefutable argument that the government should give tax breaks to all industry.

    But wait- there is still more. The oil industry is so important to the economic well being of this country, (more important than the film/ tourist industry) that oil’s path from subterranean reservoir to the consumer should be as simple and cost free as possible.

    If taxes were dropped from oil exploration and the difficult path to consents for drilling made simple, then oil would be drilled for and discovered and that oil would bring unequaled economic growth to NZ without government intervention.

    So the intent and outcome we both share. We disagree on the path to that outcome, and that difference is what makes me a free man and a free marketeer, and you an interventionist and socialist.

    You don’t help baking the cake, why should you eat the cake?

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  34. Viking2 (11,125 comments) says:

    The NZ Inititive this week has a criticism of the Norway way. Well worth a read. Agree with Redb. Its socialized the oil revenues to the extent that Norway is not competitive with any other trade.

    Aside from the questionable wisdom of putting money into a separate vehicle while the budget is in deficit, or indeed while the government has any net debt, there is another reason to be sceptical of the proposal. The Norwegian SWF does not make much sense even for Norway.

    http://nzinitiative.org.nz/Media/Insights/x_post/norway-no-way-00208.html

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  35. Matthew Hooton (124 comments) says:

    Redbaiter says: “No the oil belongs to those who risk life and limb and fortune to find it and bring it to surface and ship it or pipe it and refine it and truck it and then sell it. The state merely “licences” these people to carry out these activities.”

    I didn’t know you we’re so sympathetic to the EPMU. You sound a bit more communist than I was in the original NBR column.

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  36. Redbaiter (7,522 comments) says:

    Sorry Matthew, maybe I could have made that clearer. When I say people, I am talking about the investors. The citizens and venture capitalists who put their money into oil exploration ventures. The groups who bid for and are awarded the exploration licences.

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  37. Matthew Hooton (124 comments) says:

    RB: well, at least you seem to accept the southern basin oil belongs to the crown at present, to award exploration licenses to whomever it likes. For a while I thought you were saying it belonged to Exxon or ngai tahu or some other multinational

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  38. bhudson (4,734 comments) says:

    The groups who bid for and are awarded the exploration licences.

    So he admits that they have no inherent right to the oil, but then rails against those granting the licenses exercising the right to stipulate the terms under which those licenses are granted (including, of course, the taxes and royalties payable.)

    How bizarre.

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  39. dime (9,367 comments) says:

    The sad thing about NZ.. what would be more palatable to the electorate?

    FREE MONEY NOW or Huge tax cuts that would lead to investments and jobs for decades.

    No doubt the free money for no work option would be the most popular.

    Dipshits would use terms like “so we can spend some time with our families” awww doesnt that create lovely mental images? picnics and rainbows etc etc

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  40. Redbaiter (7,522 comments) says:

    “So he admits that they have no inherent right to the oil,”

    I say that the person who owns the oil is the person who discovers it and gets it to market. Licensing areas for orderly exploration is a totally different argument.

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  41. Matthew Hooton (124 comments) says:

    bhudson: exactly. I hope RB is never the auctioneer for a house I sell because I assume I wouldn’t be able to set any reserve price!

    dime:what is so dipshit about wanting to make money in order to spend more time with our families? I work hard through the year exactly so I can take the kids to whistler each Xmas holidays. If I could find a way to do this while working less I would. It’s called family values (and what life is about).

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  42. Redbaiter (7,522 comments) says:

    Sure it is but you don’t do it with Other People’s Money.

    You want revenue from oil then get a lease, explore, drill, extract, ship and sell yourself. Or buy shares in a company that does that.

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  43. Jack5 (4,569 comments) says:

    Matthew Hooton suggests:

    …it has been suggested the value of our offshore oil reserves could be in the trillions

    It’s also been suggested by politicians and bureaucrats that we have trillions of dollars worth of minerals lying on the sea floor in methane-gas rich methane hydrate. International hypesters say methane hydrate on international ocean floors contains at least 15 times the energy of all the world’s shale deposits.

    Never mind that no-one can extract gas from methane hydrates meaninfully, let alone economically. Never mind that that methane hydrate lies in heaps round the countries (like Japan, China, North America and Europe) that the bureaucrats expect would buy our methane hydrate-derived gas.

    In the meantime, overwhelmingly, it’s gas rather than oil that explorers find offshore around NZ and that seismology tests suggest waits to be tapped. Sadly, we don’t have large enough local markets for small gas finds, nor big enough gas finds to justify expensive liquefaction plants and export as LNG.

    Matthew is correct that we should harvest what we have. However, it’s easy for politicians and analysts to drift into hype.

    Those who make forecasts based on their money are far less bullish. L and M Energy, listed on the Stock Exchange, was privatised early this year largely because of lack of investor interest. L and M Energy was pioneering promising gas-from-coal exploration as well as looking at onshore exploration in Taranaki. The man behind the company and the guy who bought out other investors, one Geoff Loudon, is an internationally successful gold miner, and is a leader in under-sea mining (his main field is off PNG).

    Two of the biggest weights that so spectacularly sunk Solid Energy were energy related: diesel from the vast lignite deposits in Southland, and both coal-seam gas and liquefaction of coal into gas at Huntly. The resuscitator machine hasn’t been switched off on comatose Solid Energy, and the hype is flying again.

    When the economy turns down, you can count on bureaucrats and politicians to come up with bullshit like the claim not-so-long-ago claim that NZ had more mineral riches per head than Saudi Arabia (they were, of course counting methane hydrates).

    The message to politicians and analysts like Matthew is: Find the fucking stuff first! Then crow!

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  44. Matthew Hooton (124 comments) says:

    RB says: “I say that the person who owns the oil is the person who discovers it and gets it to market. Licensing areas for orderly exploration is a totally different argument.”

    There is something in what you say. But, still, the state can set whatever rules it likes in terms of who gets the license. And it can also look for the oil itself.

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  45. dime (9,367 comments) says:

    Matthew – it was in response to this idiot:

    “National unemployment at 3%, a budget surplus of 12%, citizens choosing to work fewer hours to spend time with their families. And you have the effrontery to claim that oil revenue is destroying the Norwegian social fabric???

    You’re crazy. You are literally insane.”

    the guy who thinks for some reason free money (for a limited time) is a great idea. As opposed to rewarding those who choose to work and pay their own way with tax cuts.

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  46. Redbaiter (7,522 comments) says:

    “And it can also look for the oil itself.”

    Of course. If it so chooses the government can do almost anything. Which is why there should be in every democracy a constitution focused not on rights but on the limitation of government.

    However if government did look for oil itself, it would at the least be socialism, and or communism or fascism.

    I am not a supporter of any of those political systems. Neither is anyone else with a functioning brain.

    I support free market capitalism.

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  47. Kovac (29 comments) says:

    It sounds like you blindly support free market capitalism with a fanaticism that allows no room for subtlety or grey areas where something other than slavishly following that singular model might be useful.

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  48. Redbaiter (7,522 comments) says:

    Kovac, you cannot be partially pregnant.

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  49. MT_Tinman (2,985 comments) says:

    Keeping Stock (8,908) Says:
    June 24th, 2013 at 10:35 am
    God forbid that a nest-egg of cash ever be accumulated that Labour and the Greens could get their mitts on. The golden spending years of Michael Cullen would pale into insignificance once this current mob got spending.

    KS, That deserves repeating.

    Gawd help Kiwisaver!

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  50. slijmbal (1,210 comments) says:

    I spent a couple of years working at Shell’s Exploration and Production Labs in Rijswijk (KSEPL). Admittedly, 25 odd years ago. I also did some work for Schlumberger. The KSEPL lab had about 700 employees and that was just involved in R&D.

    The science and engineering technology required to find and extract oil is exceedingly expensive, specialised and well beyond what NZ could reasonably do from a standing start. We are forced to partner unless we find enormous gobs of the stuff in easy to find and extract locations.

    Norwegian Oil was relatively easy to discover and extract from memory with concentrated large amounts of oil. They got lucky.

    Hard to compare the two.

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  51. OECD rank 22 kiwi (2,810 comments) says:

    So Matthew Hooton’s argument is that New Zealand should become Venezuela. Half way there then already. Just need to find the oil.

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  52. Kea (11,878 comments) says:

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  53. hj (6,341 comments) says:

    Is population increase government policy (like NZ)?

    oh yes (I see it is)
    http://breakingviewsnz.blogspot.co.nz/2011/08/david-round-tragic-lessons-from-norway.html

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  54. hj (6,341 comments) says:

    The Green Party has warned the ownership of New Zealand’s oil outside the 12 nautical mile limit may turn out to be the “biggest Maori land grab in New Zealand history”.
    http://www.nbr.co.nz/article/greens-warn-over-seabed-mineral-claims-126671

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