O’Reilly on resources

January 18th, 2012 at 2:00 pm by David Farrar

Phil O’Reilly writes in the Herald:

As we start 2012, we have an opportunity to earn new wealth and control how it is earned and spent.

New Zealand has come out of the global economic crisis with strengthened markets for our traditional soft commodities, dairy and other foodstuffs, and with more market opportunities for sophisticated manufactured goods.

As before, our prospects depend on how well we do business and exploit those opportunities. But there are also new opportunities emerging. Because of new global economic needs and technologies, our hard commodities – minerals and petroleum – offer outstanding rewards.

And if you are going to whine about people moving to Australia, and the need for more jobs in NZ, then don’t adopt an economic policy of leave it all in the ground.

Our democratic system allows all New Zealanders to have a say over the development of our resources, most of which are owned by the Crown (that is, all of us), and we have a process by which we can tell the Crown what we want.

The process is the review of the Crown Minerals Act being undertaken on behalf of the Crown by the Ministry of Economic Development. …

We should take this opportunity seriously. We should respond not just to the questions in the review but also put forward our views on the big economic questions:

* Which resources, how much and when, should we access?

* Which offer most opportunity to grow high-tech industries with high-skill, high-paid jobs?

* What level of royalties and taxes should be paid by enterprises wishing to access our resources?

* How much transparency should we demand from those enterprises?

* How can we best use the income earned?

* How can we have world-best safety standards?

* How can we ensure the environment is left the same or better afterwards?

These are not vague, feel-good questions – they require information and specific answers. To answer, we can look at other mining countries.

The Greens answer seems to be to say no to any additional mining or drilling. I hope Labour considers a more sophisticated approach.

We shouldn’t look to third-world countries with poor environments and poor law enforcement – countries with the “resource curse”, where over-reliance on natural resources blocks the development of other industries.

We should look at first-world countries where resources play a part in balanced economic growth, creating industries and employment – such as Norway, Australia and Canada.

None of these countries has a perfect record, of course. For example, we would want to avoid poor practice in how local communities are treated. We would want to ensure all New Zealanders reap the benefit.

Norway shows us how much people can benefit from responsible resource use. Norway’s oil revenues play a major part in supporting high-quality health, education and welfare services and infrastructure.

Similarly, our own resources could do an enormous amount to pay for more generous public healthcare, better care for the aged, more teachers, better social services, improved roads, rail infrastructure and so on.

Absolutely. Closing the gap with Australia and ensuring NZers maintain a decent standard of living has no silver bullet to it. It’s doing lots of small to medium things such as improving ports profitability, and growing the minerals sector.

O’Reilly on ETS

May 5th, 2010 at 10:00 am by David Farrar

I agree with the sentiments expressed by BusinessNZ CEO Phil O’Reilly:

In business there is a wide range of opinion stretching across the spectrum, from zealous green through to emissions denial. The most common reaction has been concern about increased energy costs just as businesses start to recover from the recession.

Why not delay it, they say – especially since Australia is now pulling back from its earlier commitment to emissions trading. The answer is probably that delay wasn’t a feasible option.

New Zealand’s situation is very different from Australia’s. Australia has never had an emissions trading scheme, so delaying the introduction of one would have been relatively straightforward.

To delay it in New Zealand would mean introducing amending legislation under urgency and ramming it through Parliament without even going to select committee. This would be Labour’s wet dream – National breaking its election promise and doing an u-turn, and even worse forcing it through under urgency to over-turn previous legislation that had been the subject of three years or consultation and debate.

If National did this, they would be suffer much the same fate as Kevin Rudd just has (fallen behind in the polls for the first time ever), but arguably even more.

But New Zealand has been committed to it since the trading legislation passed in 2008 by the previous Labour-Greens Government.

The present Government came into power that same year, on an election promise to improve the scheme passed by Labour and the Greens. Their mandate wasn’t to dismantle or delay it but to improve it.

The failure of Copenhagen has happened since then, and we should respond to that failure. But scrapping the entire scheme is daft and would lead to higher Government debt.

Had the Government sought to dismantle or delay it we would have had a fourth parliamentary/select committee process in as many years, with even more divisive, rancorous debate.

With Labour committed to returning New Zealand to the previous draconian emissions scheme and the Greens unwilling to compromise on their climate change stance, the issue would have become a long-running, festering sore.

Labour’s scheme had less protection for trade exposed industries, and would see greater costs on businesses, despite their competitors not having them.

Taking the longer view, it’s hard to deny the certainty that the world is headed towards a price on carbon. Whether it’s by way of carbon taxes or emissions trading schemes and whether within two years or 20, the clear intent of Governments around the world is to restrain emissions using economic tools.

I agree a price on carbon is almost inevitable. Even if you do not believe the claimed indirect warming effects of carbon emissions (which there is debate about), even the direct warming effects (which there is almost no debate about) makes a price on carbon sensible.

Official figures show New Zealand is on track to meet our 2012 Kyoto target. In 2012 our gross emissions will be 23 per cent higher than in 1990, but this will be more than offset by forests planted since 1989, with many New Zealand foresters actively receiving tradeable carbon credits.

This is key. Forestry is already in the scheme. You can not simply scrap a scheme that has already started. Forest owners are owed hundreds of millions of dollars for their forests under the scheme.

The fact that we already had the legislation as far back as 2008 and the kinds of decisions made by other Governments over the last year have led to the situation where New Zealand is now a leader in taking action on emissions, rather than our desired position of fast follower.

And this is a concern. But the answer is not to scrap a scheme that has been in place since 2008. It is to use the 2011 review to decide whether to amend the rate at which businesses get exposed to the full cost of carbon, and when sectors such as agriculture enter the scheme.

We are scheduled to have a review of the scheme before the end of next year. Business NZ believes this review should be brought forward starting no later than the end of this year.

The review should cover issues like the cost impact on consumers and businesses, competitive disadvantage issues and the position of agriculture and other sectors within the scheme.

Positions need to be developed based on current economic and international considerations.

We should all keep in mind the fact that the world’s consumers are increasingly seeking low-carbon goods and services and our trading scheme is the vehicle for nudging our producers on to a profitable low-carbon path.

And we shouldn’t forget that taking action to reduce emissions and look after our environment is, in the long run, the right thing to do.

I think it would be useful to wait for the Mexico conference, and see if that is as unproductive as Copenhagen. If it is, then the review of the ETS should look towards slowing or delaying the impact of the ETS in trade exposed sectors especially.

Tourism more than clean and green

December 29th, 2009 at 9:48 am by David Farrar

Phil O’Reilly makes the point that our tourism is not just based on a clean and green brand. This is not to say one should not protect such a brand, but also not to get hysterical that some mining on 0.001% of DOC land will damage the brand. O’Reilly lists other reasons people visit here:

  • The country is beautiful, and the people are friendly, open, down to earth, direct, hospitable and welcoming. New Zealand people are “authentic”. They say there is something vibrant about us.
  • New Zealand is safe and pretty. It’s the least corrupt country in the world. The people are honest and trustworthy.
  • Americans say the food is good, with no worries about food safety. Australians talk about flying over to have fun in Courtenay Place.

And he goes on:

People overseas find our countryside beautiful but they tend to mention our people more. And, interestingly, I’ve never heard anyone describe New Zealand in terms of “clean and green”. Yet we seem to have convinced ourselves that that’s how the world sees us.

We seem to have a view that any chink in our environment will badly compromise our clean, green image in the eyes of the world.

I don’t think people overseas do have such simplistic opinions. Most people are realists. They understand that an absolutely pristine environment is not achievable unless humans are somehow removed from the picture.

As some want.

O’Reilly predicts public service strife

December 27th, 2009 at 10:50 am by David Farrar

The SST reports:

BUSINESS BOSS Phil O’Reilly is predicting 2010 will be a year of industrial strife and an “ugly” budget that will bump up the GST rate.

O’Reilly, the chief executive of Business NZ, said he expected “fireworks” from public sector unions as the government tightened the screws on spending, and Finance Minister Bill English has said total government spending cannot increase more than $1.1 billion in the May budget, a difficult task considering that public hospitals alone have been soaking up an extra $700 million a year in recent budgets. English has warned public servants such as teachers and nurses not to expect pay increases that are “out of line with realistic expectations”.

More than 50,000 primary and secondary teachers will negotiate a new pay deal with the government when their current agreement expires at the end of June.

“I think we will see quite a few sparks fly,” O’Reilly said. “Government departments are being told how much they can spend so you’re going to see an ugly budget from the perspective of government spending and that will impact people like the state sector unions, the teacher unions and so on. I wouldn’t be at all surprised if some of that was turned into industrial action.”

NZ Council of Trade Unions president Helen Kelly said O’Reilly was being “hysterical” but warned that public sector workers would not tolerate zero pay increases or cuts in services.

“We are ready for that kind of a year but we hope commonsense will prevail.

I am all for common sense. Common sense is that the economy has grown only 0.4% in the last six months, so pay increases greater than the rate of economic growth are not common sense. Likewise borrowing more money to fund pay increases is not common sense when you are borrowing $240 million every week just to pay for current salaries.


October 12th, 2009 at 12:00 pm by David Farrar

A nice headline in the Herald about how the dole queue has dropped for the first time in around a year. However I would not read too much into it:

  • Firstly the HLFS is the better (and internationally) comparable figure of unemployment as it measures everyone available and looking for work regardless of if they are on the dole.
  • Some of the drop is because of the Government’s subsidies for young people. Now it is great this has got them into work, and off the dole, the effect may not be permanent.
  • There are seasonal issues, and over summer you gets tens of thousands of tertiary students seeking work

So I still expect unemployment to increase in the HLFS in Sep 2009 and Dec 2009 quarters. But maybe things will get better before late 2010.

But Business NZ chief executive Phil O’Reilly said the figure tallied with other evidence that employment might be picking up much sooner than the September quarter of next year, when current economic forecasts predict unemployment will peak at 7.5 to 8 per cent.

“There’s a good possibility of a permanent trend downwards from early next year,” he said.

That would be good.

Council of Trade Unions secretary Peter Conway agreed that the signs were that unemployment would peak sooner than next September and at less than 8 per cent.

He and Mr O’Reilly noted there had been no large-scale closures in the last few months, although there was a risk that some businesses might be forced under by the strength of the dollar.

Let’s just hope the US economy doesn’t implode, causing a W shaped recession.


March 22nd, 2009 at 10:17 am by David Farrar

Just watched the first Q&A. Overall pretty good.

The Guyon Espiner interview with Key was solid. He probed Key on lots of areas – and Key actually revealed quite a bit of stuff we didn’t know.

The panel was Therese Arseneau (who is permanent) and Phil O’Reilly and Russel Norman. I did find it unusual that you would have the leader of an opposition party as one of the panelists discussing the interview of the Prime Minister. I would have thought MPs should only ever be interview subjects, not panelists discussing other MPs.

The second interview (done by Holmes) was with Andrew Little. I was amused to see footage of Andrew in the mid 80s (when I first met him) and even more amused that they dug out a televised exchange between Andrew as NZUSA President telling Tertiary Education Minister Phil Goff that he is talking nonsense and Goff asking Andrew to stop talking over him. The moderator was a very dapper Lindsay Perigo!

I thought it was revealing when Andrew said “Labour has Phil Goff as its Leader – it only has one leader – it’s Phil Goff”. I was waiting for the “for now” 🙂

Andrew did say that he had criticised Labour in the past as EPMU National Secretary. I think he misses the point that yes he did in the past, but now he is Labour Party President he could never criticise Labour publicly.

More revealing I thought was that he appeared to be saying he would be a President more in the style of Judy Kirk – behind the scenes, than Mike Williams who was very high profile.

Andrew finished by saying his record shows that he is very professional (and to be fair to Andrew few would dispute that) when dealing with workers issues, and already has been working with a number of Ministers.

Holmes asked if he would stand for Rongotai if Annette King stands for Mayor and vacates her seat before 2011, and Andrew kept his options open saying he has not considered that scenario. I read that as a “yes”.

I was surprised Holmes was relatively tough on Little. In my mind I saw Guyon as doing the tougher interviews, and Holmes doing the slightly less pointed ones. But Holmes pushed Andrew quite hard and asked some very good questions.

Therese made a very interesting point about Andrew’s two hats that he may build up a bigger media profile than Goff, because he is so often in the news as EPMU National Secretary.

Russel Norman made the point that while it is good to see Labour promoting insulating homes now, that getting them to agree to the package before the election was like pulling teeth.  Normal also acknolwedged that National is wrong footing Labour by doing things both on the right and the left.

Overall the panel discussion moderated by Holmes went very smoothly I thought.

I think that TVNZ will be pretty pleased with their first episode.

Business NZ Conference Part V

September 3rd, 2008 at 2:05 pm by David Farrar

Business NZ CEO Phil O’Reilly reported on the results of their survey of members. Over 2,000 members responded – mainly small business:

  1. Skills Shortage biggest issue – can not get skilled staff despite rising unemployment
  2. Firms want to innovate but don’t feel well positioned to do so
  3. Concerns about “environment” for business  – Holidays Act, ERA, ACC


  • 72% say education system not meeting skills gap
  • 94% say more work needed on apprenticeships and industry training. Need action not rhetoric
  • 91% say all school leavers should achieve NCEA Level 1 for literacy and numeracy
  • Not just student loans driving people overseas
  • The underlying problem is competitiveness
  • NZ economy not growing enough high-paying jobs so skilled Kiwis being sucked overseas


  • 89% say R&D tax credits will nit lift R&D spend. Pointed out many small business who responded do no R&D
  • 54% say policies needed to improve access to venture capital
  • 54% say government assistance should be through a contestable fund

Environment for Business

  • 71% say the dismissals provision in ERA is below average
  • 54% say ERA collective approach is wrong way – less than in past
  • 89% do not want laws for work-life balance
  • 61% want ACC opened up for competition

Open ACC to Competition (Bus 61% yes)

ACT – yes
Labour, NZF, Greens, UFNZ – No
National, Maori – will consider it

Flatter Taxes

National, ACT, UFNZ – Yes
Labour, Greens, Maori – No
NZF – no clear policy

Local Government stick to core business (Bus 64% yes)

ACT – yes
Labour, Greens, Maori – no
National, NZF, UFNZ – no clear answer

Support FTA with China (Bus 55% yes)

Labour, National, NZF, ACT – yes
NZF, Greens, Maori – no

Should NZ be international leader on climate change? (Bus 73% No)

Labour – yes
ACT, UF – No
National, NZF, Greens – unclear answer