No evidence that mines damage tourism – All mines don’t stink alike

BigCake thinks some of the opponents of mining in national parks maybe getting ahead of themselves with fear mongering over what more mining will do for our clean and green image.

And because perception is so important in this argument, the opponents may just be stoking up a self-fulfilling prophecy.

Mining is clearly not a good thing for the environment, but the extent of damage needs to be weighed up against the positives (mainly more money for a country that is running short of it).

Ummm, I’m not sure that there is actually any more than that.

Anyway, it’s a balancing act and we need to be careful not to get carried away with the negative side of the ledger (and the positive), particularly till we see the detail of what is being proposed.

But there’s no immutable law that mining (and I’ll throw oil into this pot) is bad for tourism. Check out Waihi and the Martha Hill mine.

Also it doesn’t appear to have done the tourism industry of that dirty big miner Australia any harm.

The land of Broken Hill ranks above New Zealand in the Travel and Tourism Competitiveness Report (9th to our 20th). In the natural environment measure, which includes quality of the natural environment, number of species and extent of protected areas, Australia ranks 4th to our 27th.

What about the home of the Alaskan oil fields and Appalachian coal mines then? The US ranks 8th in the report. (1st in natural environment).

And that acid dumping ground Canada? 12th overall and 17th in natural environment.

And like New Zealand, most tourists are coming to see the natural wonders in these countries rather than museums, art galleries etc

Yeah, this is a bit simplistic, but the above numbers show we need to careful not to overstate the downside, for tourism at least, of mining in our national parks.

The same for the impact on our food and beverage exports.

BigCake thinks any go ahead to mine the parks needs be subjected to a pretty high hurdle because our clean and green image is very precious and fragile.

We don’t have a hell of a lot of advantages over the rest of the world so we need look after this one.

But that doesn’t mean just saying ‘no’.

And as I’ve mentioned before, the whole mining bandwagon has a whiff of a get rich quick scheme. As Unlimited magazine comments on an interview with the NZ Institute’s Rick Boven, we still need to focus on the resources above the ground to improve our economic performance.

Mining our way towards that forgotten 2025 target – Export growth

A Government 2025 economic target that has largely snuck under the radar is the “aspiration” to lift exports from 30% of GDP to 40% by 2025.

It’s another big ask, but it’s the guts of how we’ll achieve that other target – income parity with Australia by 2025.

The Government says the overall thrust of its economic policies is to shift the economy more towards exports and productive investment, and away from consumption and borrowing.

Bits and pieces are happening in key policy areas affecting exports such as in science and innovation, trade agreements, infrastructure and regulations but nothing you’d think that would be enough to get us up to 40%.

According to Ministry of Economic Development (MED) calculations, our exports would need to be 2.7 times higher in 2025 than they are now to hit the target. That’s a cool $100 billion or so more in exports.

Judging by the PM’s Statement to Parliament, the Government is pinning its hopes on mining.

Key says there’s “extraordinary economic potential in the mineral estate residing in Crown-owned land”.

It even has an “action plan” (you seen any others of these?) to unlock New Zealand’s petroleum potential which the Government reckons could generate many billions more in export revenues by 2025.

“Mining in New Zealand uses just 40 square kilometres of land, less than 0.015 percent of our total land area,” Key says. “ The export value of that land however is $175,000 per hectare, which makes mining an extremely valuable use of land.”

BigCake supports the idea of finding out what’s under our conservation land, a proportion of which is not high conservation value, but is deeply uncomfortable with the Government’s greedy eyes.

Any conservation land that has valuable mineral deposits needs to be subjected to a balancing act between economic and conservation values.

Key appears to be indicating the scales will be tipped in favour of the former.

Also mining is in a way a cop out. Find a massive oil field in the Great Southern Basin and then you don’t have to do any of the hard stuff.

And hitting that 40% will be hard.

Professor Paul Callaghan has talked about needing 300 or so more companies of Icebreaker’s size to get there.

Back in 2006 a New Zealand Institute report  (The Flight of the Kiwi), while proposing a “conservative” target of exports equalling 35 percent of GDP by 2020, said that’d need three new Fonterra-scale companies or 500 former IT darling Rakon-sized ones.

But the export target is not entirely pie in the sky. As the Institute points out, in 2000 when there was that rarest of unions – strong commodity prices and a low New Zealand dollar – our export to GDP ratio (briefly) hit 35 percent.

However, most of the last 20-odd years the ratio has been stuck around the current 30 percent – that’s compared to a small OECD country average of more than 50 percent.

Innovation – well sort of

Innovation maybe the single most important talent that will get us out of our economic growth quagmire, though we are not as crash hot at it now as we like to think we are.

But BigCake worries (based on the work of two Government taskforces) that we once again maybe taking a blinkered view of  growth opportunities, this time in innovation.

As mentioned earlier (What the hell’s ‘good economic growth’?) any increase in the size of our economic cake has to be smart.

Applying innovation to New Zealand’s natural resources – frozen meat, aerial topdressing, the herring-bone milking sheds – helped make (and for a long while keep) New Zealand as one of the world’s wealthiest countries.

Disconcertingly we may not now be as good at innovation as we imagine we are.

An Innovation Index produced by IBM and the University of Auckland shows our overall innovation record has flatlined for the past decade, rising 13% between 1998 and 2000, then levelling off and dropping in 2008, no doubt recession induced.

Ummm, that’s what happen when you, in the words of think tank the New Zealand Institute, don’t make “as much effort as other small countries that are seeking advantage from innovation”.

BTW – the usual advice for companies in recessions is to increase their innovation spend. It may hurt, but will pay off latter.

Anyway, the Government has recognised the importance of innovation to economic growth, and that dread word productivity, by indicating it will make science and innovation a “priority” for new spending in this year’s Budget. Remember most of the public sector will be (in fact are) on starvation rations.

But there appears to have been a couple of gaps in thinking about the innovation issue when ministers commissioned taskforce reports into lifting our economic performance.

First up, Brash’s 2025 taskforce report only makes passing mention of innovation, mostly along the lines of: “What markets do best is to encourage innovation…”

Surprisingly the report does give a plug for Government intervention in the venture capital market – one of the big drivers of business innovation – through taxpayer investment in the NZ Venture Investment Fund.

The other oversight is raised by commercial lawyer Andrew Simmonds in an innovation perspective on the Capital Market Development Taskforce’s report.

He says the taskforce’s focus was “unduly narrow in two important areas”:

1) the report concentrates on the publicly funded elements of the innovation sector (universities and crown research institutes) and overlooks the large and vibrant private innovation sector and
2) the taskforce put “too much emphasis on growing innovation companies with NZ capital… In many situations, NZ innovation companies will be better served by offshore capital…”

This is a touchy area, but Simmonds is right and New Zealanders need to get over their reflexive attitude that overseas investment in our companies is bad.

It maybe so, but most of the time not, particularly for our exporters.

It’ll often come down to a choice between having a small New Zealand company that exclusively finances itself locally, or the opportunity for the Kiwi company to grow into a business of truly international scale.

This is not just about money. What international investors bring to the party include access to offshore markets, management experience and local knowledge in offshore markets.

Do we want 100 percent of a biscuit or half of a cake?