HON GERRY BROWNLEE MP for Ilam

$4 million West Coast Timber Settlement

nospam@example.com (admin) — Thu, 10 Sep 2009 12:50:00 +1200

The government is making a $4 million dollar payment to four West Coast timber mills to settle a long running grievance with the Timberlands West Coast SOE.

Economic Development Minister, Gerry Brownlee, says an ex gratia payment is being made to address the failure of Timberlands to supply its forecast of timber harvest from 2000 when indigenous logging stopped

"The government commissioned an independent assessment by KordaMentha to assess the actions of Timberland. KordaMentha concluded Timberlands may have not acted fairly to the West Coast timber industry over log projections," said Mr Brownlee.

"A good faith ex gratia payment has been offered to the mills which made significant investment decisions to process pruned logs based on over-estimated projections," he said.

"The affected mills agreed between themselves how they would split the total payment. This is a good outcome that I am pleased resolves a long-standing grievance," said Mr Brownlee.

The mills are Westco Lagan Ltd and Westimber Ltd, (which are both still operating), W.E. Whiley and Co Ltd (placed in receivership in 2008) and Inangahua Sawmilling Ltd, which closed in 2008.

Mr Brownlee said that while the government had no legal obligation to compensate the mills it was prepared to make the ex gratia payment as a full and final settlement over any future claims the mills might make.

"I hope this closes the final chapter on this saga," said Mr Brownlee.

National tourism energy efficiency programme launched

nospam@example.com (admin) — Wed, 09 Sep 2009 11:36:47 +1200

Energy and Resources Minister Gerry Brownlee has welcomed the launch of a national programme to improve the energy performance of New Zealand’s tourism businesses.

“The results from the pilot programme, a joint project between the Energy Efficiency and Conservation Authority (EECA) and the Tourism Industry Association (TIA), showed this was a worthwhile investment.

If all of the 16,000 tourism businesses in New Zealand made similar savings to businesses in the pilot programme, that’s nearly $500 million dollars a year that could be invested elsewhere,” said Mr Brownlee.

The Tourism Energy Efficiency Programme was launched by the Associate Minister of Tourism, Jonathan Coleman, in Auckland today.

It will improve the competitiveness and environmental credentials of New Zealand tourism businesses through better energy management.

“This programme provides practical assistance for tourism businesses in the accommodation and transport sectors to use energy management to reduce costs, reduce environmental impacts, retain jobs and keep thriving,” said Mr Brownlee.

“Tourism is a $20 billion industry that contributes close to 10% of New Zealand’s GDP and employs one in ten New Zealanders, Mr Brownlee said. “It is an industry that is vital for our economy.”

“It is also an industry that relies on New Zealand’s unique natural environment as the main tourism product,” he said.

Participating businesses receive a detailed energy audit, identifying potential dollar and energy savings, at approximately half the normal price. The businesses also receive free mentoring and assistance in implementing energy saving opportunities.

The programme was first developed as a regional pilot in 2008. Twelve tourism businesses identified potential energy savings worth $375,000 a year, and annual savings of over 700 tonnes of CO2, equivalent to taking 170 cars off the road.

Results from the programme are then shared with other tourism businesses to encourage widespread replication.

The government, through EECA, contributed $160,000 to the pilot project. An additional $287,000 has been allocated to the next phase of the project which will audit a further 14 tourism operations.

Home insulation retrofits top 7000 in eight weeks

nospam@example.com (admin) — Fri, 04 Sep 2009 11:15:00 +1200

The Government’s home insulation scheme has resulted in more than 7000 New Zealand homes being insulated or fitted with clean heat in the eight weeks since the scheme started.

Prime Minister John Key, Energy & Resources Minister Gerry Brownlee and Green Party co-leader Russel Norman today visited the Mangere home of Gaznafar and Shabina Buksh, and their three children, to mark the two month milestone of the Warm Up New Zealand: Heat Smart scheme.

The Buksh family are having ceiling and underfloor insulation put in, as well as a cylinder wrap and moisture barrier, and heat pump. The installation is being done by Eco Insulation, a North Island company that has employed 50 new staff to deal with increased demand since the scheme’s launch on 1 July.

As well as the subsidy from the scheme, the family are getting funding under the ASB Community Trust’s Snug Homes programme.

“It’s very pleasing to see so many New Zealand families taking up the home insulation scheme. It’s tracking well ahead of target, which is good news,” says Mr Key.

“Warmer, drier homes means energy savings, lower power bills and better health outcomes. The sooner the insulation goes in, the sooner those benefits start mounting up for people.

“It is pleasing that this project is also creating jobs around the country. Most providers registered under the scheme have already hired new staff to cope with the demand, while insulation manufacturers have increased production, creating more employment.”

Mr Brownlee says a new network of providers will be signed up to install the insulation from 1 October, and an announcement will be made soon on which companies have been selected as long-term providers under Warm Up New Zealand: Heat Smart.

“This will mean even more suppliers on the ground to deliver the scheme, which will mean more jobs, as well as more homes insulated. Some homeowners have had to wait for a provider.

“I am asking people to be patient while the scheme is still gearing up, but the numbers show that even before we’ve reached full capacity many thousands of families are already benefiting.

“Bringing in more companies will mean people can get their homes attended to faster, and start reaping the benefits earlier.”

Background

The Government announced funding of $323 million in the May Budget for a programme to fund insulation and clean heat in New Zealand homes.

Warm Up New Zealand: Heat Smart was launched on 1 July. The programme, run by the Energy Efficiency and Conservation Authority, will insulate 180,000 homes over four years.

Between 1 July and 1 August 2009, 3282 homes were insulated and/ or fitted with clean heat under the scheme. EECA’s tracking shows that more than 4000 homes have been retrofitted during August. Exact totals, including a regional break-down, will be released mid-September.

For more information see www.energywise.govt.nz

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Opening Address to Australasian Institute of Mining and Metallurgy 2009

nospam@example.com (admin) — Wed, 26 Aug 2009 10:36:00 +1200

Introduction

Good morning. May I begin by saying how delighted I am to be part of your annual conference and, in particular, to be invited to present this opening address.

I would first like to welcome you all, especially the international delegates and conference speakers.

It’s a pleasure to be with you and I hope that while you are here in Queenstown you will have an opportunity to enjoy the many attractions that this beautiful part of New Zealand has to offer.

Let me begin by talking briefly about the government’s approach to our natural resources, then make some comment on your industry’s achievements over the past year.

Then I want to talk about the plans the government has to enable New Zealand’s minerals industry to grow over the coming years.

Government’s approach to natural resources

The National-led Government is absolutely determined to raise our living standards.

That is going to require a big improvement to our economic growth and productivity rates.

We see our natural resources as playing a big role in contributing to those goals.

There is no doubt that New Zealand is a mineral rich country.

A recent report by Richard Barker estimated our metallic mineral potential to have a gross in-ground value in excess of $140 billion, with lignite alone at least an additional $100 billion.

Australia is often referred to as the “lucky country” because of its natural resources endowment.

The Ministers in the previous Government often used to explain away the gap in per-capita income between Australia and New Zealand as being almost entirely due to their mineral abundance.

But New Zealanders need to know that this country is also well endowed with natural resources.

A report circulated by the World Bank some years ago ranked New Zealand second in the world in terms of natural wealth per capita.

We were behind only Saudi Arabia, but well ahead of Australia.

So I am firmly of the belief that our natural resources have the potential to make a significant contribution to our prosperity and our economic development.

As a nation we have neglected the contribution that the resources sector could make to our growth rate, levels of employment, and quality of life.

Our Government wants to change that.

We are going to be far more pragmatic and supportive than the previous administration towards exploration and mining activity.

Of course we must be cognisant of our responsibility to the environment. But mining and the environment can co-exist together. I will talk more about that in a few moments.

Now for some facts and figures…

I want to commend you all on an extremely successful year.

It has been a record year for mining activity with provisional data indicating that the national coal, metals and industrial minerals production for 2008 has exceeded $2 billion in value for the first time ever.

Looking briefly at 2008 in summary:

gold production topped 520,000 ounces with a record value of $626 million, largely on the back of increased production from Newmont’s and Oceana Gold’s operations and high commodity prices;

coal production was stable at 4.9M tonnes, marginally up on the previous year, but this should increase substantially over the coming years once Pike River is running at full capacity; and

the total value of all industrial minerals and building stones produced was almost $537 million.

These figures represent total production value however from the data to hand it appears that exploration activity and expenditure for 2008 was down on recent years.

Total expenditure for prospecting and exploration was $18 million, down from $38 million in the previous year.

While the current global economic recession contributed significantly to the drop in 2008 expenditure by limiting credit and tempering exploration budgets, repeating the previous year’s bumper expenditure was always an unlikely outcome.

One bright spot however is the successful near-mine exploration of major producers to raise the resource base and extend the mine life of some of our larger mining operations.

I’m referring here of course to the efforts of Oceana Gold at Macraes and Reefton, Newmont Waihi Gold at Waihi, and Solid Energy at Stockton.

Improving access to mineral resources

So what has the government got planned to lift investors’ perceptions of New Zealand as an attractive mineral investment destination and to make things easier for you to go about doing what you do best – finding mineral deposits and developing them.

Increasing our international exposure is a fundamental way to encourage new explorers and investors into New Zealand.

Crown Minerals will continue to actively promote New Zealand’s mineral potential at appropriate international conferences and to target key investors and companies.

For my part, as Minister of Energy and Resources, I am committed to unlocking New Zealand’s mineral potential for the benefit of all New Zealanders, both present and future.

At the beginning of the year the Prime Minister asked me to specify my top priorities for each of my portfolios.

I advised him that one of my top priorities in the resources area is to improve access to mineral resources.

In my short time as Minister I have become acutely aware that one of the fundamental barriers to mineral exploration and development is access to prospective land, particularly to land administered by the Department of Conservation.

Reasonable access to the mineral estate in Crown-owned land, particularly conservation land, is a key issue.

There are obviously competing objectives here but there is scope to explore how economic development objectives could be better reconciled with other land values.

There is the potential for more flexible arrangements that do not undermine conservation and environmental objectives.

The Minister of Conservation and I have agreed that officials from Crown Minerals and DOC are to work together with a clear directive to make progress on improved access to conservation land across three fronts.

These are, first, a review of Schedule 4 of the Crown Minerals Act.

Second, improvements to DOC processes for access arrangements

And third, consultation on the reclassification of DOC administered land

I now want to briefly discuss each of these areas of work in more detail.

Starting with Schedule Four, let me put it into perspective.

I understand that DOC administered land hosts a majority of our mineral potential – an estimated 70%

About 40% of that land is listed in Schedule 4 of the Crown Minerals Act.

That means something like 30% of our most prospective land is off limits because the Minister of Conservation is not allowed to enter into any access arrangement for any area described in Schedule 4, except for certain low impact activities.

This effectively precludes all mining activities and most exploration activities on that land.

Collectively the areas currently covered by Schedule 4 make up around 13% of New Zealand’s total land area and include the highest value conservation areas.

Some of the areas within Schedule 4 are known to host significant potential for zinc, lead, copper, nickel, tin, tungsten and other metals.

The current inclusion of these highly prospective areas in Schedule 4 has potentially denied significant opportunity for economic benefit at both a national and regional level.
I have directed Crown Minerals to undertake a strategic review to determine areas possessing significant mineral potential that, with the removal of the access prohibition provided by Schedule 4, could through responsible mining techniques contribute considerably to our prosperity.

The Crown Minerals Act sets out a process for amending Schedule 4 and as part of that process the Minister of Conservation and I will need to consult with interests likely to be substantially affected by any changes before making a decision.

While most here would agree that a review of Schedule 4 land is much needed, others in the community will have the view that, given most of the land has a high conservation value, there are very few places listed on Schedule 4 where mining activity might be appropriate.

In the case of Crown land, including that administered by DOC, the Crown has distinct interests in both the land itself and the Crown owned minerals on, or under, that land.

The relative value of these two interests depends on the specific circumstances.

Accordingly, before making a final decision to recommend that certain areas are removed from Schedule 4, the Minister of Conservation and I will be required to carefully consider the land’s mineral potential and conservation values respectively.

DOC processes for access arrangements

Turning now to the Department of Conservation access arrangements, I am well aware that, although DOC access applications are generally granted, there are some particular concerns in your industry about the process.
Common concerns include the length of time to process applications, costs in time and resources, a lack of transparency, and conditions that some applicants consider unduly onerous.

There are also indications from industry that devolved decision making and the absence of generic DOC processing procedures has resulted in inconsistencies as different conservancies take different approaches.

The Minister of Conservation and I will require DOC and Crown Minerals to progress the development of mandatory nationwide DOC standard operating procedures for processing access arrangement applications under the Crown Minerals Act.

A large part of the solution, in my view, will be better communication of what the rules are, and how they will be consistently applied across all conservancies.

The new procedures will provide for:

improved clarity regarding the information that needs to be included in an application;
improved guidance on the factors that DOC needs to consider under its legislation – in other words, to explain to applicants why certain information is needed;
specified fees and consistency in setting compensation; and
clearer timeframes for each step of the process to reduce the delays and frustrations currently experienced by both the industry and DOC.

As part of the process, officials will also seek comment and further information from the minerals industry, in particular about the guidance and application forms that industry would like to have available to assist applicants in preparing access applications.

I envisage that the new standard procedures will be operational early next year.

Consultation on the reclassification of DOC administered land

I would now like to touch on the reclassification of DOC administered land.

Reclassification currently takes place under several different provisions of five different statutes.

None of these statutes require the Minister of Energy and Resources to be consulted prior to public notification and only two - national parks and national reserves - require me to be specifically notified.

Accordingly, under current law any opportunity costs associated with a reclassification can only be assessed by Crown Minerals and raised with me after proposals to reclassify areas have already been publicly notified.

This situation is clearly unsatisfactory as reclassification of DOC land can significantly raise the conservation threshold in respect of gaining access to mineral resources.

Fortunately, with the Oteake Conservation Park proposal, at a late stage I was able to meet with the Minister of Conservation to discuss the impact that the park would have on any future development of the Hawkdun lignite deposit.

The Minister of Conservation gave due consideration to the economic development potential and consequently the park boundaries were amended to exclude this important lignite deposit which constituted just 0.3% of the proposed conservation park.

To improve the present situation, the Minister of Conservation and I have directed officials to develop options to improve processes around DOC consultation with Crown Minerals on conservation land reclassification.

Personally, I favour a system where all DOC land reclassifications are referred to Crown Minerals prior to public notification so that an early review of the land’s mineral potential can be undertaken.

I am confident that the three initiatives that I have outlined today will provide a solid platform for improving and increasing access to conservation land for responsible mineral exploration and mining activity.

Environmental Responsibility

Let me pick up on that theme of responsibility for a moment.
One thing I always stress when talking about our natural resources is that good economic outcomes must not be inconsistent with good environmental practice.

As a government we know that we need to preserve the environment for future generations.

There are a number of examples that demonstrate that good mining practice can be reconciled with respect for the environment.

Take for example the Pike River coal project on the West Coast, which was presented with a certificate from DOC for the “environmental consideration it demonstrated” in the development of the coal mine.

The mine’s environmental footprint has been kept to a minimum through good design, with little damage to the ancient trees and bush.
Driving through the spectacular Paparoa ranges, you would not know there is a coal mine only a few hundred metres away.

The building of a road through the ranges to get access to the coal mine has actually opened up that area of the country for people who otherwise wouldn’t get to experience it.

There is ample scope for environmental tourism.

The Newmont Waihi Gold in Martha Hill is another example of mining co-existing with environmental responsibility.

Rehabilitation of the Martha Mine has been a major part of mine planning.

Waste rock embankments and disturbed land are being returned to productive pasture.

When the mine closes it will be turned into a safe, stable, and self-sustaining rehabilitated state.

The pit and surrounds will become a recreational lake and park, and extensive areas of pasture will be established over waste rock stockpiles and other disturbed areas.

A final example is the work of Solid Energy at the Stockton Opencast Mine.

Solid Energy has an environmental policy of reasonably minimising the adverse local environmental affects that may be an unavoidable part of operating coal mines.

As part of this, it spent 13 months between 2006 and 2007 collecting over 6,000 “Augustus” native land snails from the Mt Augustus ridgeline of Stockton Mine.

Following collection of the snails, much of the original habitat was moved 800 metres north.

By the end of 2007, approximately 4,000 snails, and over 1,000 eggs, had been released onto this and other sites.

The three examples I’ve mentioned demonstrate that mining and good environmental practice can sit side by side.

I hope to see many more examples of these in the future as the industry expands and grows.

Conclusion

In closing, let me reiterate what I said at the start of my address.

The National-led Government is absolutely determined to raise our living standards.

The development of our abundant mineral resources will play an important role in achieving that goal.

My hope for the sector in the coming years is that we see increased prospecting and exploration in New Zealand, leading to increased production and added value to the New Zealand economy.

Thank you again for the invitation to speak to you this morning and I wish you all a productive and informative conference.

Aus & NZ Join in Mega Science Bid

nospam@example.com (admin) — Fri, 21 Aug 2009 11:17:00 +1200

The Australian and New Zealand governments have agreed to join forces to bid for the A$2.5 billion (NZ$3.1 billion) international Square Kilometre Array (SKA) project.

The formal arrangement will be signed by New Zealand’s Economic Development Minister Gerry Brownlee and the Australian Minister for Innovation, Industry, Science and Research, Senator Kim Carr, at the Australia-New Zealand Leadership Forum in Sydney this morning.

The SKA is a large-scale, new-generation radio-telescope that will be by far the most powerful of its type in the world, with a discovery potential 10,000 times greater than current instruments.

The SKA will see up to four thousand antennas spread over a five thousand kilometre baseline to create a single deep space listening device.

The telescope – able to see back to the formation of the first stars – is one of the world’s most significant mega-science projects – on a par with the Large Hadron Collider in Europe. Australia and New Zealand are one of the two shortlisted sites – the other is in Southern Africa.

“The SKA project promises to be a top global science project of the 21st century, using one of the world’s most powerful computers, to explore fundamental questions in science,” Mr Brownlee said.

“Extending the configuration of the SKA to include New Zealand will significantly add to the scientific outcomes of the project and could possibly see two stations constructed in New Zealand with an array of radio telescopes,” said Mr Brownlee.

The agreement follows discussions on the SKA between Australian and New Zealand Prime Ministers over the past 12 months. It commits both countries to supporting SKA-related industry opportunities and promoting their industry capabilities internationally as part of this process.

Senator Carr said: “New Zealand’s participation will strengthen the bid to host the SKA, one of the world’s great science projects, making the bid truly international.

“New Zealand is crucial to building the global collaboration required for the SKA to reach its full potential.

“If our bid is successful, the SKA will not only significantly increase Australia’s and New Zealand’s scientific capabilities; it will result in economic benefits and spinoffs in a number of areas, including supercomputing, data transmission, renewable energy, construction and manufacturing,” Senator Carr said.

“From New Zealand’s point of view this agreement will also be a stepping stone to foster strong links and cooperation between Australian and New Zealand industry, particularly in the high-technology sectors,” Mr Brownlee said.

Final decisions on the SKA, including the host site, are not expected until 2012, with construction expected to run for six to eight years. The project currently involves a total of 19 countries.

For more information, including pictures and animations, visit www.ska.gov.au or www.skatelescope.org

Background on the SKA

If the New Zealand and Australian bid to host the SKA is successful, the SKA instrument will consist of up to 4,000 antennas and other devices spread from Western Australia to New Zealand. These radio telescopes will all operate in unison as one instrument.

The term “Square Kilometre Array” refers to the fact that when fully operational, the large number of radio telescopes will provide a combined collecting area of one million square metres (i.e. one square kilometre).

Increasing a telescope's collecting area increases its sensitivity. Thanks to higher sensitivity, weaker signals emitted by more distant or fainter celestial objects, can be received. One of the aims of the SKA is to receive signals from the early Universe – the most distant objects that can be observed. These signals are very faint and hence require a very sensitive telescope so they can be detected. This means the SKA needs to be very large.

Designing such a scope will require vigorous technological developments in computing, engineering, communications and radio frequency devices. Internationally the SKA program is being progressed by a consortium of more than 50 institutions from 19 countries, including Australia, New Zealand and countries in Europe, Asia, Africa, and the Americas.

The cost of the SKA is currently estimated at A$2.5 billion (NZ$3.1 billion). It is expected that financing for the construction and operation of the SKA will come from international partner governments. New Zealand and Australia are members of an international group considering a range of issues relating to the SKA including governance, design, procurement and financing.SKA Science

The SKA will help to answer fundamental questions about the universe. The five key science drivers for the SKA have been identified as:

Cradle of life – this project will explore whether there are Earth-like planets around other stars, and whether they host intelligent life, thus helping to answer the eternal question of whether there is life elsewhere in the universe.
Probing the Dark Ages – this will explore the first black holes and stars, and help to answer the question of what happened after the big bang and before the first stars and galaxies formed.
The origin and evolution of cosmic magnetism - this will explore how magnetism affects the formation of stars and galaxies, and what maintains the present-day magnetic fields of galaxies, stars and planets.
Strong field tests of gravity using pulsars and black holes - this will help to test whether Einstein's theory of general relativity is the last word on gravity, for example, whether its predictions for black holes are correct, and whether the cosmos is filled with a gravitational wave background.
Galaxy evolution, cosmology, and dark matter - this will explore how galaxies are born and how they evolve, and seek a better understanding of the "dark energy" that fills the majority of the universe.

For more information on the Australia and New Zealand SKA bid visit www.ska.gov.au. Further information on SKA is available at www.skatelescope.org. Pictures and animations can be accessed on both sites.

Insulation ahead of target

nospam@example.com (admin) — Tue, 18 Aug 2009 11:18:00 +1200

Energy and Resources Minister, Gerry Brownlee, says the government ‘s home insulation scheme is exceeding expectations in its first month of operation.

The Warm-Up New Zealand Heat Smart scheme started on July 1st.

"In the first four weeks I am pleased to report that 3,282 homes have been retrofitted," said Mr Brownlee.

"The figures collated by EECA show that 2,519 homes received insulation only, 255 received insulation and a clean heat appliance, and 508 with just a clean heating appliance."

"In terms of the types of houses being retrofitted 1,983 (60 percent) of the homes are owned by Community Service Card holders, and 1,299 are general income houses.

"The first month is a very positive indicator for the scheme. The government set a target of insulating 27,500 houses in the first year and this start-up month indicates we will easily achieve that," said Mr Brownlee.

"This has also been achieved in just the early roll out stage and before contracts have been signed to bring on even more service providers," he said.

"EECA has recently opened applications for new service providers. It received 249 applications which are currently being processed. New providers will be operational from 1 October, which will herald a serious step-up in insulation work," said Mr Brownlee.

"I am aware there has been some suggestion at this early stage that the government grants have inflated prices, although the advice I've received from EECA is that there is no indication of a widespread problem."

"And it is important to make the point the scheme is designed to make sure there is no price gouging. For example the new contracts given to providers from October 1st will ensure that only service providers offering the best prices and quality standards are selected to deliver the programme," said Mr Brownlee.

The applications also allow EECA to gauge the appropriate market prices and to only enter into contracts with service providers who will offer acceptable prices.

"It also means once contracts are signed, service providers cannot increase their pricing without negotiating with EECA. There is also an auditing process undertaken by EECA which will monitor prices being charged and take the action of cancelling service provider contracts if necessary," he said.

"Can I also thank the Greater Wellington Regional Council for its decision today to participate in the scheme from September of this year. "

The Council will provide a grant of up to $2,600 per ratepayer to fund the remaining cost of insulation and heating above the government subsidy.

Ratepayers will be able to repay this grant through their rates over a 10-year period.

"This is a welcome and useful development because it removes any up front costs for Wellington ratepayers who wish to insulate their homes," said Mr Brownlee.

Electricity review released

nospam@example.com (admin) — Wed, 12 Aug 2009 11:19:00 +1200

The Energy and Resources Minister, Gerry Brownlee, says the Ministerial Electricity Market Review released today is an opportunity to address consumer concerns about rising power bills and security of supply.

The Ministerial Review offers a series of recommendations on improving electricity sector performance and was released today for a five week consultation period.

The review was conducted by the Technical Advisory Group appointed by the Minister and chaired by Dr Brent Layton with assistance by officials from the Ministry of Economic Development.

“I welcome the document. It is a well written report which offers practical solutions to many complex problems facing the electricity sector,” said Mr Brownlee.

“The primary goal of the review is to tackle the steep price increase to the consumer power bill over the last ten years, and to examine ways to reduce vulnerability in dry years,” said Mr Brownlee.

The review offers a range of recommendations including:

governance improvements with the Electricity Commission replaced with an Electricity Market Authority.
line companies allowed back into retailing
compensation payments to be made to consumers if they face conservation campaigns.
a reallocation of assets among SOE generator-retailers to increase competition in wholesale and retail markets.

“It is important to emphasise that this is a discussion document and my officials and I look forward to receiving feedback on the proposals - before any final decisions are made,” said Mr Brownlee.

“The government does find many of the recommendations appealing, including a system of offering compensation to consumers when asked to save power during a conservation campaign, ” he said.

“This idea really does create a big incentive for generators to manage their resource and ensure conservation campaigns are a last resort. If conservation measures are needed the consumer compensation will be an acknowledgement for inconvenience,” said Mr Brownlee.

“Ministers have discussed restructuring SOE generation assets and have ruled out option one and two as too costly and risky, and need to be convinced about the third option (ie asset swaps between Meridian and Genesis, he said.”

“Can I commend the Technical Advisory Group and MED officials for their work on this report. It is a very useful contribution and offers solutions to many difficult areas in the electricity sector I am especially pleased with the way it tackles the pricing issues which trouble many homes,” he said.

A five week period has been put aside for consultation. A copy of the report can be found at the MED website: www.med.govt.nz/electricity-market-review.

Electricity Market Review – Q&As

Why is the government reviewing the electricity market?

The government is concerned about security of supply, the affordability of electricity, and sector governance. The review is a timely and effective way to consider several reports and analyses on electricity market performance, and to develop proposals for improvements.

What is the objective of the review?

To improve performance of the electricity market and its institutions and governance arrangements in order to better achieve the government’s objectives for the electricity sector. A well-functioning electricity market should provide a reliable supply of electricity at competitive prices, that is, prices which are as low as possible consistent with ensuring reliable supply over the long term.

Who undertook the review?

An independent Electricity Technical Advisory Group (appointed on 1 April 2009) and the Ministry of Economic Development. The ETAG members are Dr Brent Layton (Chair), Miriam Dean QC, David Russell, Professor Lewis Evans, Stephen Franks and Toby Stevenson.

What is the scope of the review?

The Minister asked the review team to assess the performance of the electricity market, institutions and governance to date; identify problem areas; assess to the degree possible the costs and benefits of different reform options; and make recommendations to improve electricity market performance. A public discussion document outlining the review team’s preliminary recommendations is now being released for public consultation.

What was out of scope for the review?

The ownership and governance of State Owned Enterprises, the economic regulation (price control) of electricity lines, and wider energy sector regulation, such as gas regulation.

What did the review team consider?

The review team considered:

– The Electricity Commission’s review of the events of winter 2008.
– Available analysis of electricity market competition, including the Commerce Commission’s investigation into wholesale and retail market competition.
– The Law and Economic Consulting Group’s (LECG) report on electricity market governance for Business New Zealand.
– Current knowledge and perspectives on electricity market design and regulation.
– The market and regulatory experiences of other jurisdictions.

What are the main conclusions of the review team?

The review team has concluded that:

– The rate at which retail prices have risen, especially for residential consumers, appears excessive notwithstanding significant increases in the costs of generation. This is primarily attributed to insufficient competition in the retail market, and, to a lesser extent, in the wholesale market.
– The way in which dry years are managed can be substantially improved.
– The reliability and capacity of the transmission system can be improved.
– The governance arrangements for the sector can also be improved.

What is the timetable for electricity market reform?

The government expects to make final decisions on the reform package by the end of the year. Legislation will almost certainly be required to implement final recommendations. The government intends to conclude the review in a timely manner to ensure public, industry and investor confidence in the electricity market.

How do people have their say on the Electricity Market Review discussion document?

Submissions on the discussion document are to be received at the Ministry of Economic Development by 5.00pm Wednesday, 16 September, 2009. Further information on the public consultation process is available at www.med.govt.nz/electricity-market-review.

Address to Private Capital Markets Forum: "Venture Capital in NZ"

nospam@example.com (admin) — Mon, 10 Aug 2009 10:39:00 +1200

Good Evening,

Thank you for the invitation to speak to the New Zealand Venture Capital Association.

I wish to start by paying tribute to efforts made by Colin McKinnon, the association's executive director

And also to Franceska Banga for her introduction and the work she undertakes on behalf of the Venture Investment Fund.

This government's overall goal is one of growing the New Zealand economy to deliver greater prosperity, security and opportunities to all New Zealanders.

We set ourselves the aspiration of raising exports from there current level of 30 per cent of GDP to 40 per cent and income parity with Australia by 2025.

To generate the higher rate of growth required we need to rapidly alter New Zealand's mix of goods and services towards those that provide higher value and higher returns - products which differentiate on the basis of quality and innovation rather than price.

As a small open economy located far from markets, we face some barriers. The global economic crisis has made our task that much harder still.

However, other small, open, advanced economies with similar characteristics, such as the Scandinavian countries, have been successful in leveraging their natural resources into higher value products.

There is no reason why New Zealand cannot enjoy the same level of success.

The National-led Government came to power with a clear agenda designed to help New Zealand businesses through the crisis but to also ensure that they are well placed to take advantage of opportunities in the long term.

As a government we want to make it clear what actions we will take to support New Zealand businesses.

This is why we are in the process of developing an economic growth agenda with a clear path forward which makes it easier for businesses, unions and the public to understand what we want to achieve and to add their support to the cause.

We envisage that this will lead to a package of measures focussed on building our competitive strengths and raising productivity.

In February this year I wrote to the Prime Minister, outlining my three priorities as Minister of Economic Development. Specifically these are to:

Improve business support programmes;
Develop areas of competitive strength; and
Bring an economic development perspective to major government decisions such as the Rugby World Cup.

One of the first steps towards improved business support programmes is a new grants scheme called the International Growth Fund which was launched on 1 July by New Zealand Trade and Enterprise.

This Fund will be focused on supporting those firms most likely to operate successfully internationally and who will deliver the greatest benefit to the New Zealand economy as a whole.

NZTE has also restructured the delivery of the new grants programme in order to better assess and meet business need.

As a result, there will be more targeted engagement with business which will enable better, more relevant solutions.

We have also been reviewing existing government business assistance programmes with a focus on improving the efficiency and effectiveness of these.

New Zealand also needs to increase its share of existing markets as well as develop new markets, products and services around areas of competitive strength - our primary products.

To ensure we have an export lead recovery we are investing in some key initiatives. They include:

Ensuring public research and science institutions are more responsive to business needs and better support business opportunities in our areas of competitive strength.

Assessing the merits of proposals to create a network of food research development and commercialisation centres. Good progress is being made in this area and I expect to be providing advice to my Cabinet colleagues on ways forward in the very near future.

We have also replaced "Fast Forward" with initiatives that more effectively link research, development and commercial activities in the primary sectors and address impediments to economic growth. I plan on working closely with the Ministers of Agriculture, Forestry and Fisheries on specific initiatives over the course of this year. Can I add aquaculture is an example an area where we can develop new food products and develop new markets.

But to achieve success requires several things, not least of which is deeper and more sophisticated capital markets.

Efficient financial markets are fundamental to economic development because they attract capital and channel it to entrepreneurs and growing businesses.

And successful financial markets are often more than the sum of their parts.

The breadth and sophistication of an economy's financial infrastructure is important.

At a minimum we need exchanges where equity can be readily traded, and people willing and able to help match investment opportunities with suitable funding. Also crucial are early-stage capital markets.

I accept it is not easy to establish a venture capital industry here and acknowledge it takes time to grow, but the growth so far has been encouraging.

This government recognises and appreciates the value of the work that both the NZVCA and NZVIF have done in catalysing the development of venture capital and early stage markets in New Zealand so far.

The New Zealand Venture Investment Fund was established in June 2002 and has now made $110 million in capital commitments to six Venture Capital Funds.

Investments of both private sector capital and VIF capital combined are $232 million into 48 companies as at June 30th this year.

The Seed Co-Investment Fund has 9 approved investment partner networks and $20.9 million combined crown and private sector capital committed to 26 companies.

This government also recognises that developing a self-sustaining early stage capital market is a long game.

We recognise that some aspects of our capital markets are underdeveloped and that the task has been made doubly difficult with the current economic downturn.

So what direction and attitude is the new government taking towards protecting and encouraging venture capital.

The first step is recognising that for venture capital to succeed the underlying business settings have to be put into place.

I am pleased to say in a short period of time we are making good progress,

And I think this first year of the new government will be judged as a foundational year for steering the economy back on track.

For example there are a number of programmes in place.

We have established a Tax Working Group which is taking a medium term look at taxation issues. This working group is chaired by Professor Bob Buckle and will report back by the end of the year.

It's been asked to give advice on how we can have a competitive tax system and means it will also be watching carefully developments in Australia with its tax review.

In recent week the government has also announced the 2025 Productivity Taskforce chaired by Dr Don Brash.

This will identify policy setting and changes to deliver productivity growth and it has a tight time frame of having to release an initial prescription by October this year.

You will be aware the Regulation Review led by Rodney Hide is well underway and will no doubt lead to a significant reduction in business red tape.

Just this week, my colleague the Immigration Minister Jonathan Coleman, and I released a new Business Migrant scheme

Developed on the back of the Job Summit and after consultation with industry leaders this new package is designed to attract high value investor migrants.

In other words it's a way to attract more equity into the country.

You may be aware the Finance Minister is leading a rewrite of the foreign investment rules to attract further balanced investment

So you can see there is no shortage of ideas on how to create the best business settings.

More specifically there is also some fresh thinking being applied to the issues of capital investment markets.

Many of you will be aware we have the Capital Markets Development Taskforce underway.

It is designed to address a range of various tax and regulatory issues on behalf of the industry.

This Taskforce is in effect an acknowledgement by the government that efficient financial markets are a key part of an environment in which the private sector can thrive.

And for those of you who have contributed and made submissions so far I would like to express the government's appreciation.

It is too early for me to say what results we will receive from the Capital Markets Development Taskforce but I can say that my colleagues and I will be keen to implement any recommendations that are beneficial for the growth of our economy.

You may also be aware my officials with the Ministry of Economic Development are conducting a review of the Venture Investment Fund.

I am not due to receive the results until September but can I signal now that I am persuaded by the work of the fund so far, and see no value in undermining or dismantling the important progress in developing venture capital funds.

In recent weeks I have met with Sir John Anderson and Fransceka Banga to discuss venture investment.

It was pleasing to hear about some of the businesses and their products assisted by venture capital investments.

Of course one step the VIF board considered necessary to help cope with the challenging economic climate is the creation of the annex fund.

It seems to me to have been a logical move to help businesses feel confident about the availability of follow-up funding at a time when the sources of capital are drying up.

I have also had the opportunity to meet with Jenny Morel from Number 8 Ventures, she is, as many of you are aware, a strong advocate for venture investment.

It was an interesting meeting. Jenny argued strongly about the ratios behind the government investment. She argues there is a greater need for the Crown to offer more one to one ratio's for venture investment.

While I am not going to rush to judgement on this, I do want to say I may have some sympathy for the argument, and simply note it as a matter worthy for further consideration.

I say this because I think it's important to signal the government still retains an open mind on developing venture capital initiatives.

So can I start to conclude by saying good progress is being made toward fixing the underlying business fundamentals in the New Zealand economy.

Get that right and the prospects for venture capital gets better.

And can I leave you with this thought. The economic climate is beginning to change. Just this week the share market was back up to the 3 thousand points marks.

The language of the economic commentators is beginning to subtly change - less talk about the bottom falling out of the economy and more talk about how long it will take to recover.

So I think its time to embrace a more positive tone.

Less worry about how we can protect ourselves - and more thinking about what opportunity exists .

And the government will continue with its clear and consistent goal to get our economy back on the road to recovery.

I wish you the very best of luck for the New Zealand Venture Capital Association's annual general meeting....and look forward to meeting and talking to some of you later in the evening.

Opening Address to the 2009 EDANZ Conference

nospam@example.com (admin) — Mon, 10 Aug 2009 10:37:00 +1200

Priorities for New Zealand in the current economic environment

Introduction: Weathering the downturn

The Government understands that times are currently tough for businesses and local communities and that Economic Development Agencies are working hard to respond to these challenges.

You are "on the ground" delivering the solutions and knowledge that we need to emerge strongly from this recession.

I encourage you to continue in your efforts to deliver regional economic development activities which will help strengthen the national economy

As you know, what began as a crisis in the American and European financial markets rapidly developed into a concerted worldwide recession.

Many governments are still working to stabilise troubled banks and cope with rapidly rising unemployment.

New Zealand has avoided the worst effects of the crisis due to our sound banking sector, an export base that gives us a comparative advantage in hard times, swift and measured responses by our Government and the Reserve Bank - and of course the resilience that ordinary Kiwis and businesses have displayed across the country.

Our banks remain stable and are now, along with Australia's and Canada's, among the most stable in the world. The retail deposit and wholesale funding guarantees that we have maintained are working.

Our export base gives us a comparative advantage in hard times. While consumers are putting off buying new cars or flatscreen televisions, they still need our dairy products, meat, wine and fruit.

The Reserve Bank's OCR cuts have lowered borrowing costs for individuals and firms.

We have aimed to protect the hardest-hit New Zealanders from the worst effects of the recession. We are focused on helping businesses protect jobs and giving New Zealanders who lose their jobs the best chance of finding a new one.

As a result, we have committed to a fiscal stimulus that will amount to about 5% of GDP over this year and the next - high by world standards.

While our path has been smoothed by these actions, we have not escaped the global downturn - firms are facing challenges including tighter credit and falling domestic and overseas demand.

Ultimately, we must use this recession as the occasion to shift our country onto a higher growth path. To truly "recover", we must improve the way we do business, and make hard work and innovation more rewarding.

We have a real chance to emerge from the recession in a stronger position than most other countries - with higher levels of productivity growth and improved export competitiveness.

Today, I'd like to talk with you about the opportunities that I see amidst the current turmoil.

First, I want to introduce some important themes from the Government's new Economic Growth Agenda, and some steps we have already taken towards lifting productivity and creating a better environment for growth.

Second, I want to talk about the areas in which local economic development organisations can support and strengthen our work.

Seizing the opportunities will take some hard work - and a lot of the creativity that our country is known for - but I believe that we are up to the task.

A New Focus

My colleagues and I spent our first 100 days in office focusing on quickly implementing our campaign promises to make it easier for employers, workers, and households to weather the downturn.

In that time, we accomplished a lot in the way of loosening restrictions on business flexibility and pumping a significant amount of money into the economy to support jobs - from the $1 billion in income tax cuts that have been putting more money in average workers' pockets since April to the nearly $500 million worth of roading, housing, and school projects that we accelerated.

Now, while we're still concerned with helping ordinary Kiwis and businesses ride through the recession, we also have to think about the future for New Zealand - how we will emerge from the downturn in a stronger competitive position.

To address this, my colleagues and I are developing a new Economic Growth Agenda. One thing that won't change is our commitment to putting common-sense ideas into practice - this plan will be about actions, not words.

I expect economic development agencies to have a strong role in delivering and supporting our Agenda in a number of key areas.

Key Message: Emerging stronger

The Economic Growth Agenda announced by the Prime Minister on 15 July isn't just about surviving - it's about maximising our opportunities and emerging from this downturn in a stronger position relative to the countries we compete with internationally.

We are seeking to raise New Zealanders' incomes and narrow the income gap that has opened with Australia and our other trading partners.

We aspire to raise exports from their current level of 30 percent of GDP to 40 percent, and achieve income parity with Australia by 2025.

To do so, we'll need to play to our strengths - our expertise in food production, our beautiful landscape, unique culture and clean environment, and our Kiwi ingenuity - and take good opportunities to create and market higher-value goods and services.

This will mean improving our economic fundamentals and making smart investments in six key areas:

We will invest in productive infrastructure, including new road, school and hospital projects and an ultra-fast broadband network that will help our firms overcome the "tyranny of distance" to reach new customers abroad.

We will create a world-class tax system that rewards hard work and innovativeness.

We will reform regulatory road-blocks such as the unwieldy Resource Management Act.

We will put discipline into government spending and provide front-line services at a lower cost.

We will invest in lifting the literacy and numeracy skills of our young people.

We will implement responsive and targeted business assistance and align our innovation system with industry needs.

As Minister for Economic Development, I am leading work in the sixth area, and working with my colleagues on several others. In particular, I would like to talk to you about three of my key priorities under the Economic Growth Agenda:

Overhauling business support programmes to improve the benefits gained from investment in firms with high international growth potential;
Building on our areas of competitive strength and our science and innovation system; and

Ensuring lasting economic benefits to New Zealand from major initiatives such as the Rugby World Cup.

Clearly, much of the Economic Growth Agenda is relevant to economic development agencies, as you are often the "front line" of support for growing and established businesses.

I understand that your priorities, including digital development, the Rugby World Cup Legacy Project, building management capability in firms, local infrastructure investment, and acting as a conduit between firms and Government growth and research funds, often relate to our goals, and I welcome your input and engagement.

Economic Growth Agenda

Although my colleagues and I are still developing further the details of the Economic Growth Agenda, we have already taken some initial steps. For example, we have:

Launched New Zealand Trade and Enterprise's new International Growth Fund, which is focused on supporting the firms that are most likely to succeed internationally and bring the greatest benefit to the New Zealand economy as a whole. This, along with our wider Review of Business Assistance, will change the way we deliver growth funding to firms.

Created the Primary Growth Partnership, which will provide up to $70 million in matching funds for primary sector research. The Ministry of Agriculture and Forestry will be delivering funds by the end of the year.

Invested $1.5 billion over ten years to roll out ultra-fast broadband to businesses, schools, hospitals, and 75% of NZ homes.

Started reviewing clunky regulation including the Resource Management Act and aquaculture related legislation.

Set up the NZ Insulation Fund to improve health and energy efficiency by helping home owners and occupants fit homes with insulation and clean heating devices.

Furthermore, we've got several important priorities coming up that promise to be quite relevant to your work as local economic development agencies:

I am working with Jonathan Coleman, the Minister of Immigration, on a new Business Migration Package, which we announced on the 28th of July.

We aim to ensure that new investor and entrepreneur migrant rules bring the most benefit to New Zealand by conducting targeted marketing campaigns overseas and linking new migrants into domestic business and investment communities. I expect EDAs to play a key role in doing so.

I am currently considering options for creating a network of food research development and commercialisation centres. This would establish a number of industry hubs across the country, allowing small and medium sized companies access to the facilities they need to develop new products and enter new markets.

I am working with Murray McCully, the Minister for the Rugby World Cup, to ensure that we are taking the actions needed to ensure that the event brings lasting benefits to New Zealand.

While the Rugby World Cup is a fantastic opportunity for us as a nation, its success hinges on getting things right at the regional level, with stadium development and local tourism and business initiatives. We expect to work with EDANZ and economic development organisations to link our "big picture" with regional activities.

I welcome your input to and participation in the Economic Growth Agenda that we are putting forward. Much of the important work of "making it happen" will take place at a local and regional level.

You are already involved in some of my key priorities, such as the Rugby World Cup and business migration, and I hope that you will continue to engage with us as work continues on issues such as business assistance grants, research and development initiatives, broadband roll-out and digital literacy, and infrastructure investments.

Conclusion.

While New Zealand is still facing significant challenges as a result of the world financial crisis, rapid action, good policies, and a dash of Kiwi resilience have brought us through the most dangerous times. However, we must now face up to the longer-term threats.

Over the past decades, our incomes have not kept up with those of our competitors, and our trade balance has slipped into negative territory.

Our Government seeks to reverse these trends by making innovativeness and hard work more rewarding.

As a result, we are laying out an ambitious Economic Growth Agenda that will commit to common-sense actions rather than just more words.

I've laid out a few of our actions, and expect to have a lot more to announce in good time.

Thank you for your time, and I look forward to working with you.

Marine Energy Fund Opens

nospam@example.com (admin) — Fri, 31 Jul 2009 11:20:00 +1200

Applications are now open for the third round of the Marine Energy Deployment Fund, which aims to get wave and tidal stream energy devices operating in New Zealand waters.

Energy and Resources Minister Gerry Brownlee says the purpose of the fund is to bring forward the development of marine energy in New Zealand by facilitating early deployment and adaptation of the technology.

“New Zealand is an attractive proposition for marine energy. We have a long coastline and significant wave energy potential – estimated to be around 8GW, with a further 1GW of tidal energy,” said Mr Brownlee.

“We already generate an impressive 65% of our electricity from renewable sources such as hydro, geothermal and wind, and there’s potential for more.”

“It makes sense to explore emerging generation technologies, like marine, to ensure New Zealand has a diverse and secure electricity system into the future,” he said.

The upcoming round of the Marine Energy Deployment Fund offers $2 million for pre-commercial wave and tidal stream energy devices deployed in New Zealand waters.

“Ideally the project will help to inform the government and the wider marine energy industry of the key technical challenges and the economic, environmental and social benefits and costs associated with deploying wave and tidal stream technologies in New Zealand.”

Applications for round three of this fund open on Friday 31 July 2009 and will close on Monday 23 November 2009. For more information, see www.eeca.govt.nz/marine-energy-fund.

Background:

The $8million Marine Energy Deployment Fund is a four year fund. Two rounds have been allocated, as follows:

Round one: $1.85 million to Crest Energy.

Round two: $760,000 to Wave Energy Technology New Zealand (WET-NZ).

Biodiesel Grants Scheme off to a strong start

nospam@example.com (admin) — Wed, 29 Jul 2009 11:21:00 +1200

A grants scheme set up to encourage biodiesel production in New Zealand is off to a strong start, with five companies set to take part, Energy and Resources Minister Gerry Brownlee announced today.

“Five biodiesel production companies have signed or been offered contracts to participate in the Biodiesel Grants Scheme.”

“ For a fledgling industry, I am impressed that we already have this number of companies ready to take part and sell the quantities of biodiesel required to qualify under the scheme,” Mr Brownlee said.

The companies (and their locations) are: Biodiesel Oils NZ (Tamaki), Ecodiesel (Onehunga), NZ Ester Fuels (Tuakau, South Auckland), Environ Fuels (Te Kuiti), and Biodiesel New Zealand (Christchurch).

“The companies are using a range of sustainable feedstocks to produce biodiesel, such as tallow, used cooking oil and rapeseed grown as a break crop,” the Minister said.

“The scheme will help increase the fuel choices available for New Zealand consumers and businesses.”

“Biodiesel blends can be used for a range of uses, including shipping and industrial use, as well as in vehicles.” Mr Brownlee said.

Participating companies are required to report sales of biodiesel on a monthly basis, in order to be awarded the grant. The biodiesel must be made in New Zealand, and meet the Engine Fuel Specifications Regulations.

Background:

Under the scheme, which started on 1 July 2009, a grant of up to 42.5 cents per litre for biodiesel (or biodiesel content of a biodiesel blend) is available to biodiesel producers.
The grant is paid monthly in arrears to New Zealand producers who sell 10,000 or more litres of biodiesel each month.
Funding of $36 million over three years is set aside for the Biodiesel Grants Scheme.
The Engine Fuel Specification Regulations limit the retail sale of biodiesel to a blend of 5% biodiesel in mineral diesel, which can be used in all diesel engines.
More information: www.eeca.govt.nz/biodiesel-grants

Business Migrant Scheme Revamped

nospam@example.com (admin) — Tue, 28 Jul 2009 11:21:00 +1200

The Government’s new business migration scheme launched today aims to boost economic performance by making New Zealand more attractive for business and entrepreneurial migrants.

Attracting the right business migrants was identified as a high priority initiative at the recent Job Summit and the new government scheme has been announced by Economic Development Minister Gerry Brownlee and Immigration Minister Dr Jonathan Coleman.

“This fresh approach will ensure we bring more investors, connect them with existing business networks, and create real jobs for New Zealanders,” said Economic Development Minister Gerry Brownlee.

Announcing the new policy, Dr Coleman said that since 2005 there has been a significant drop off in business migration investment due to unrealistic investment expectations and English language requirements.

The new policy package is designed for migrants who want to invest or set up a business in New Zealand and gain permanent residence.

“For investor migrants the previously existing three categories are streamlined to two, with more realistic requirements for capital, language skills and time spent in New Zealand annually, as well as a far greater flexibility in terms of investment vehicles,” said Dr Coleman.

For entrepreneurial migrants the new policy introduces a new Entrepreneur Plus category which complements the existing Entrepreneur category. Entrepreneur Plus offers a faster path to residence for applicants who create at least 3 fulltime jobs and invest $500,000 in their business.

“The last government’s business migration policies have not attracted investment. Since 2007, there have only been 23 migrants bought to New Zealand through Labour’s business migration policy. Business migration needs to be urgently addressed, and stakeholders’ feedback has been extremely positive regarding this new package,” said Dr Coleman.

Jeremy Moon, the CEO of Icebreaker Clothing was a chair at the Prime Minister’s Job Summit, and says the scheme is a “win win”.

“Business leaders suggested this idea during the Job Summit as something that could be highly effective for little cost. I back the idea because the more investment and entrepreneurship we can get in New Zealand the better, “said Mr Moon.

The new Investor policy will be implemented from 28 July 2009 and the Entrepreneur Policy from November 2009.

For more information please go to www.immigration.govt.nz/migrantinvestment

Speech to the Centre for Advanced Engineering Distinguished Fellows’ Forum

nospam@example.com (admin) — Fri, 24 Jul 2009 10:43:00 +1200

Unlocking New Zealand’s Frontier Resources

Introduction

Thank you for the invitation to be here today.

Can I say at the outset that I’ve long admired the work undertaken by the Centre for Advanced Engineering, particularly in relation to energy and resources.

I think you play a valuable role in increasing our overall knowledge base in relation to new technologies, and explaining how they might contribute to future economic growth and social progress.

The CAE is a key linkage between universities, research institutes and the private and public sectors.

So I’m delighted to be here today to address you on the topic of unlocking New Zealand’s frontier resources.

I’d first like to talk our resources potential, about the Government’s attitude to our natural resources, what we’ve done already since coming to office, and the work streams that have commenced within Crown Minerals.

I’ll then turn to frontier resources and talk about methane hydrates and lignite in particular.

I think the most valuable part of today will be the conversation I hope we’ll have after my short address about what the future looks like for New Zealand’s frontier resources.

I’m particularly keen to hear your views about what the role of government should be in this area, and how we might best assist the development of those resources.

Our resources potential

So let me start by talking about our resources potential and how this government views that potential.

I think it’s well understood that New Zealand has excellent renewable resources.

Almost all New Zealanders would know for example that much of New Zealand’s electricity supply comes from hydro generation.

And thanks to the vagaries of the weather in the last few years, we are intimately acquainted with what happens when we run out of water each winter!

Geothermal energy is also well known, and there is an increasing knowledge that we have potential for quite a lot of energy to be generated from wind – although that’s not popular with everyone.

On the other hand, very few New Zealanders I suspect are aware of the vast endowment of fossil fuel resources that New Zealand possesses, and the potential they have to contribute to our economic growth and prosperity.

I suspect if you told most people that more than 1.2 million square kilometres of our exclusive economic zone are likely to be underlain by sedimentary basins thick enough to generate petroleum, they would think you were nuts.

Likewise if you told them that New Zealand’s offshore petroleum basins, even with conservative assumptions, could be worth in the order of $4 trillion New Zealand dollars.

But both those statements about our resources potential are accurate.

I think most reasonable people when hearing those numbers would regard the government as having a duty to investigate how this potential could be translated into higher standards of living for New Zealanders.

The previous government used to talk a lot about “economic transformation”, as if saying it often enough would somehow make it happen.

There is no doubt in my mind that New Zealand’s natural resources have the potential to deliver a transformation of our economy.

As a government, we want to explore how that can occur, and what role we need to play.

Australia is often called the “lucky country” because of its natural resources endowment and rode an economic boom for the first part of this century on the back of it.

New Zealanders need to know that this country is similarly endowed.

I see it as part of my job as Minister of Energy and Resources to increase public awareness of our resources potential.

This Government is excited by the quantum gains in economic development, growth and prosperity that our natural resources offer us.

For too long now we have not made the most of the wealth hidden in our hills, under the ground, and in our oceans.

As a government we are determined to unlock our natural resources potential.

The resources sector’s contribution

Let me talk briefly about the contribution that natural resources already make to our economy.

Most New Zealanders would know that we are an agricultural nation; that a considerable amount of our prosperity is built on overseas consumers buying our dairy products and our lamb.

New Zealanders would also know that tourism is a major contributor to economic growth as well.

What most people wouldn’t know is that the minerals, oil, gas and coal being produced in New Zealand have a value of about $4.5 billion per year, and contribute more than $2 billion to exports.

The oil & gas sector by itself contributes $1.6 billion to the NZ economy annually, more than 8600 jobs, and has paid $1 billion in royalties to the Crown over the past 8 years.

Those are great figures already, but they have the potential to be so much larger.

Our natural resources endowment presents New Zealand with the potential to spread our economic reliance beyond the agricultural sector.

World demand and the role of India and China

It’s been widely acknowledged that New Zealand, as an agricultural exporting nation, is in a prime position for the coming years as the growth rates of China and India mean their citizens will increasingly demand our farm based products.

It’s also true that those economies are extremely hungry not just for food, but also resources.

They want coal for power stations, silica for microchips, iron sands for steel, hydrocarbons for automotive fuels and feedstock for petrochemicals.

Demand for these resources will only increase, and prices will only increase.

Between 2000 and 2006, world demand for coal grew at nearly 5% per year. Coal consumption is expected to grow by 61% between 2006 and 2030.

Global demand for natural gas is expected to increase by 52% between 2006 and 2030.

New Zealand is in the fortunate position of being able to meet some of this demand.

Ten years ago with mineral prices at record lows, the prevailing wisdom was that the “old economy” of natural resources was on the way out, with the “new economy” of technology and services on the way in.

That has all changed. In 2000 the market value of Cisco Systems, the world’s leading internet company, was greater than that of the world’s 12 largest mining companies combined.

In 2008 Cisco is still a large and successful company but its value is significantly less than that of BHP Billiton, the largest mining company.

What we’ve done already

We’ve done a number of things already to indicate the government’s changed attitude and to start the process of developing our natural resources.

First, we repealed the ban on new base load thermal electricity generation, which was a massive disincentive to oil and gas explorers.

Second, we’re spending $20 million over the next three years on seismic data acquisition, on top of the $3.75 million spent over the last summer.

A blocks offer based on the data already collected is scheduled for opening in late 2009

Third, we opened bidding for new petroleum exploration permits across two large offshore areas in the Raukumara and Northland basins, with a combined total area of over 66,000 square kilometres.

These blocks offers have already attracted considerable interest from a large number of international and local exploration companies.

Fourth, we’ve ensured the Hawkdun lignite deposits in Southland have stayed outside the boundary of the Oteake Conservation Park.

The lignite deposits are a significant resource of recoverable energy which could yield liquid fuels equivalent to New Zealand's transport requirements for 15 to 20 years. I’ll talk more about lignite in a moment.

And fifth, we have announced that we will revise the New Zealand Energy Strategy, so that it better recognises our goals for economic growth and prosperity, balanced by environmental responsibility. Natural resources will be an important part of the new strategy.

More work to be done

It’s clear that there is much more to do. Let me mention some of what is underway already.

I’ve asked Crown Minerals to review existing domestic and international petroleum policy, licensing and fiscal regimes to ensure they are fit for purpose.

The work will include identification of petroleum, industrial, environmental and economic policies that work well in other jurisdictions and the reasons for their success.

The aim of the review will be to recommend measures that ensure NZ continues to have a petroleum regime that is attractive to explorers and extractors, but also sensitive to environmental best practice.

Crown Minerals also has a “big oil” project, looking at how New Zealand might manage a large oil and gas find in the future to ensure we maximise value from the development of our resources.

Access to the Crown conservation estate for the exploration and mining of minerals is also a critical area of work because of the amount and prospectivity of that land.

Crown Minerals is working with the Department of Conservation with an aim to improve the access provisions through a review of the land currently held under Schedule 4 of the Crown Minerals Act, and the implementation of DOC standard operating procedures to provide transparency and clear information requirements for access applicants.

We are also considering a number of amendments to the Crown Minerals Act and the Continental Shelf Act 1964 to enhance the regulatory environment and reduce costs.

Frontier Resources

Now that I’ve mapped out the potential of our “conventional” natural resources, let me turn to what are often called “frontier resources.”

In this area I’m advised that New Zealand has considerable potential.

The recent extension of the country’s continental margins makes New Zealand the fourth largest maritime nation in the world.

Interest in seafloor minerals occurrences such as phosphates, iron sands and zones of metallic mineralisation associated with the Kermadec arc have increased significantly in recent years

But there’s a huge amount we don’t know. For example, very little is known about the extent and value of our maritime mineral resources.

However, technology is now enabling areas of deeper water to be targeted for exploration and commercialisation of oil and gas, so that knowledge gap should begin to close.

Methane hydrates

One very interesting resource is methane hydrates.

We know that there are methane hydrate deposits off the East Coast of the North Island from Gisborne to Marlborough, and also offshore from Fiordland.

We also know that they could provide up to six times the volume of gas produced from the Maui Field.

The resource located offshore on the East Coast of the North Island is characterised by a number of “sweet spots”.

These form one of the largest known offshore deposits in the world and are unique in that they are closer to shore - within 20 km - and in more accessible water depths than others.

These features make our “sweet spots” comparatively attractive to research and development options.

Estimates of the energy potential of gas hydrates from around the world have prompted major economies to advance the development of discovered methane hydrate resources.

The US Geological Survey has conservatively estimated that the worldwide amount of carbon held in methane hydrates is twice the amount found in all known fossil fuels on earth.

I understand that MED recently commissioned from the Centre an “Options analysis for the commercial and economic development of offshore methane hydrates as a future energy option for New Zealand”.

I’m yet to read the report but I understand the report confirms methane hydrates are a resource of strategic economic advantage to New Zealand.

I’m advised that the key findings are that:

Methane hydrates offer a real opportunity to make a significant contribution to New Zealand’s economic requirements.

Accelerating their development offers the potential for significant increased economic benefit.

Contingent on the development of commercial production technology, methane hydrates could underpin New Zealand’s future energy supply system and also form the basis for new export industries.

There are some immediate and practicable steps that could be taken that could significantly enhance our chances to successfully develop and maximise economic benefits from methane hydrates.

Advances in technology suggest commercial production of methane hydrates could be around 2020 and some international groups are planning for as early as 2016.

This timeframe probably means immediate consideration is required to determine an appropriate allocation regime and overall structure to manage the procurement and development of this resource.

I’d be very interested in your thoughts in this area.

Lignite

I’d also like to make some comments about our lignite resource.

South Island lignite is a strategic energy resource that has enormous national and regional economic implications.

Development of the lignite resource could not only give New Zealand assured supply of transport fuels, but have other economic benefits including improved balance of payments and tremendous economic boost to the southern South Island.

In contrast to other potential hydrocarbon resources, New Zealand’s lignite resources are well understood.

At least 6.3 billion tonnes of lignite is technically and economically recoverable. Their energy content is about 75,000 petajoules, equivalent to about 20 Maui gas fields.

Development based on a world scale facility could transform New Zealand from a net consumer to a net supplier of energy commodities and give New Zealand a significant economic advantage.

The key to unlocking this opportunity will be the application of environmentally-focused gasification technology.

In 2005 an independent study was carried out on behalf of MED to determine the contemporary economics of a development scenario for the Hawkdun and Home Hills lignite deposits. This study highlighted the following:

New Zealand’s lignite is amongst the most competitively priced energy resources in the world.

The resource is suitable for extraction and conversion to high value energy products.

The total energy content of recoverable lignite is about 75,000 Petajoules, which would provide 71 million tonnes of transport fuel, enough to supply New Zealand’s total transport fuel requirements for 15-20 years or,

Provide all of New Zealand’s nitrogenous fertiliser requirements for 127 years together with additional exports of 1.9 million tonnes per year, providing an annual income of $540 million or,

Supply New Zealand’s domestic requirements for methanol and provide an annual income of $1 billion or,

Supply all of the South Island’s electricity demand for about 60 years.

The development option that appears to have the most going for it is conversion to automotive diesel fuel.

My own view at the moment is that use of the lignite resource is probably not feasible without greater advances in carbon capture and storage technology, so that carbon emissions are kept to a minimum.

I’d be interested in your thoughts about the future of our lignite resource.

Conclusion
The only thing I want to say in closing is that we have a very bright energy future.

We have world class renewable energy sources and we have superb natural resources.

We just need to get the policy settings right so New Zealand’s energy sector can really fly, and contribute to the economy in the way we all know it can.

I look forward to working with you to make that happen and would welcome any comments that you have.

Report shows positive shifts in energy use and supply

nospam@example.com (admin) — Thu, 02 Jul 2009 11:23:00 +1200

Energy and Resources Minister, Gerry Brownlee has released the latest edition of The New Zealand Energy Data File. The publication is an annual record of energy use in New Zealand.

"This document is what you might describe as the energy bible of the country. It has been revamped to offer a comprehensive record and database of all our energy trends for each calendar year", said Energy and Resources Minister Gerry Brownlee.

"It is a very useful resource for anyone interested in the facts and figures of our energy resources ranging from electricity price trends through to the state of play in our oil and gas resources," he said.

"The report for the 2008 calendar years shows some pleasing trends. In that year around 65% of electricity generation came from renewable sources," said Mr Brownlee"

"And as reported recently in the New Zealand Energy Quarterly for the first quarter of this year, that trend improved with electricity supplied from renewable sources rising to 74%," he said.

Another positive change can be seen via the increase in geothermal electricity generation capacity by 30% to nearly 580MW in 2008.

In addition, total electricity generation dropped slightly from 2007 to 2008, mainly as a result of decreased demand from consumers and the Tiwai Point aluminium smelter.

Other key findings of the report include:

Total oil production in New Zealand increased by 45% to a record 21 million barrels in 2008, as a result of the Tui oil field coming online and continued strong production from the Pohokura field.
Oil and gas exploration activity in 2008 remained high by New Zealand standards.
Oil continued to dominate energy supply and demand, although the growth in the consumption of oil products continued to slow in 2008, a trend that has been apparent since 2005.
In 2008, New Zealand's first underground gas storage facility was developed at the depleted Ahuroa gas field in the Taranaki region.
The total annual amount of energy used by final consumers was slightly below that in 2007.
Coal consumption rose 25% to 3.9 million tonnes in 2008, as a result of increased electricity generation from coal due to low hydro inflow.

Two main features of the new and improved edition of the report include enhanced usability of the publication, and better explanation of energy flows, qualities which differ from previous editions.

The New Zealand Energy Data File is a primary source of detailed information for government, industry, research institutions, media, and interested members of the public. It also lays the foundation for much of the work on energy policy and projections by the Ministry of Economic Development.

An electronic version of The New Zealand Energy Data File can be viewed on the Ministry's website at:

www.med.govt.nz/energy/edf/

Three councils kick-start scheme allowing ratepayers to pay off insulation through rates

nospam@example.com (admin) — Wed, 01 Jul 2009 11:23:00 +1200

The government has announced the first three councils to offer their residents the opportunity to pay off energy efficiency investments through their rates, as part of the government’s Warm Up New Zealand: Heat Smart programme.

“I’m very pleased to announced that Hawke’s Bay Regional Council, Environment Canterbury and Nelson City Council have all agreed to take part in Warm Up New Zealand: Heat Smart,” Energy and Resources Minister Gerry Brownlee said today.

“These three councils are in the process of rolling out schemes suited to their areas, which will allow ratepayers to pay off insulation, and in some cases clean heating, via their rates bills.

“This makes the cost of investing in energy efficiency much more manageable for ratepayers, so they can enjoy the benefits of a warmer, drier home that causes less air pollution.”

Mr Brownlee said a number of other councils are in the process of working through the administrative and technical details for implementing the scheme through their rating systems.

The $323 million Warm Up New Zealand: Heat Smart programme plans to insulate 180,000 houses over four years.

Today Mr Brownlee visited one of the first houses to be insulated under the new programme.

The Lower Hutt house received a grant to cover part of the cost of ceiling and underfloor insulation, and a heat pump. The house was assessed by Right House.

Mr Brownlee said as well as warming up cold New Zealand homes, the programme was providing employment for out-of-work New Zealanders, both at the sales and installation end of the industry and the manufacturing end.

“I am told that Right House has employed 20 people over the last month to satisfy the increased demand and they are still recruiting. Of the 20 people, nine of them were previously unemployed young guys who are now learning a trade.

Mr Brownlee said householders interested in finding out more about the programme and how to locate a provider in their area should look at www.energywise.govt.nz

Or phone ECCA: 0800 358 676

See background below for more information about the three councils taking part in Warm Up New Zealand: Heat Smart.

Background:

Hawke’s Bay

Hawke’s Bay Regional Council are working on the details of a scheme they hope to have operational by 1 October 2009
It’s proposed that ratepayers across the Hawke's Bay region will have the option of paying off insulation on their rates bill over a time period (possibly 10 years).
In areas where there are air quality issues, such as Napier and Hastings, the regional council will provide additional grants or interest subsidised loans to help fund the cost of clean heating devices.

Canterbury

Environment Canterbury will be rolling out the coverage of its targeted rate in three stages:

a. From July 1, people within urban Christchurch city will be able to choose to pay off an insulation and clean heat retrofit on their rates bill.

b. Stage 2 begins in late 2009 to extend this eligibility for a targeted rate to outside the urban centre, including Timaru, Ashburton and Kaiapoi and Rangiora.

c. Stage 3 is as yet without a firm start date but will expand the targeted rate to ratepayers in the wider Canterbury region.

Nelson

From 1 July 2009, Nelson City Council ratepayers will be able to pay off an insulation and clean heat retrofit on their rates bill provided they are in a polluted airshed and have to replace an existing non-approved burner.