Letter From New Zealand (About NZ)

FranO’Sullivan Writes a Speech for the PM

Who owns what: for an answer, start here

By Fran O’Sullivan

NZ Herald

Saturday Sep 15, 2012

Mr Speaker, I rise today in this House to introduce legislation to vest all natural resources – water, geothermal steam, airwaves, aquifers and, for the avoidance of doubt, all minerals, ironsands, magma, rare earth deposits, coal, lignite, methane and uranium in this country and the exclusive economic zone that surrounds our shores – in a new Crown entity representing the combined interests of all the people of New Zealand.

Mr Speaker, my Government considers natural resources like water, geothermal steam, and the aquifers that underpin our rich agricultural plains to be public goods that are part of the common wealth of all New Zealanders.

For the avoidance of doubt – and I know many in this Parliament today will regard this as fanciful – the legislation will also extinguish any “rights and interests” that Maori might claim now and into the future to the commercial use of solar power, the wind, the tides, the navigational properties of the stars and the moon. This will also include the magma and lava flows which have enriched our soils over the centuries and will do so again in coming volcanic explosions.

My Government will establish Resources New Zealand as a new Crown entity where natural resources will be vested. The Government – at this stage does not assert ownership to all these resources. Some are already in the public domain. But by vesting natural resources in this entity, the Government retains the ability to go about its commercial business in the interests of all New Zealanders but at the same time preserve the flexibility to negotiate on a case-by-case basis with individual iwi and hapu to resolve historical claims where they are proven to stand up.

This is why my Government’s offer to negotiate in good faith with the representative tribes which have interests in particular waterways that drive our magnificent hydro-electric schemes still stands despite the sweeping statement by the Maori King that “we have always owned the water!”

This legislation I am introducing today also recognises the concept of the taniwha as important to Maori but explicitly extinguishes any so-called rights and interests that are claimed to have evolved from this.  But I reject wholeheartedly the notion that any such claims – if proven – should be settled by way of allocations of shares in the state-owned enterprises that we intend to partially privatise: Mighty River Power, Genesis Energy, Meridian and Solid Energy. There are other ways of settling any claims – if proven – including co-management of waterways.

Mr Speaker, there are some in this House that believe the global financial crisis is over. They do not understand that the United States has embarked on a third wave of quantitative easing – or printing money. I have strong concerns that the US is at the edge of a financial cliff. I am also concerned that China – the powerhouse of our neighbourhood – is having to embark on another multi-billion-dollar infrastructure spend to keep domestic growth moving. And that our nearest neighbour, Australia, is slowing down.  That slowdown is also affecting New Zealand as the wave of redundancies in export-sighted industries continues.

Mr Speaker, these are the issues that cry out for the burning attention of my Government.  But I am disappointed that trifling and vexatious claims are now being advanced at the very time we wish to deal with the major water issue. 

For the avoidance of doubt, let me say my Government will strongly resist the claim filed by Ngapuhi seeking commercial rights over the wind. 

Mr Speaker, New Zealand is an island nation surrounded by a vast coastline. It is subject to the strong winds which circle the globe. The wind is not something that can be captured, bottled or bagged, and sold. The wind – rather like the tides which cause our seas to rise and fall – is simply the bulk movement of air. It can power wind turbines. It can also help propel aircraft.

If Ngapuhi wish to assert a commercial right, it is a simple matter to erect a wind turbine or windmill on their own land.  But for the avoidance of doubt, my Government will also vest the wind within Resources New Zealand. I expect this will result in widespread mirth.  Carried to its logical extreme this could result in Ngapuhi claiming rights to the wind long past our shores and causing the air to move elsewhere – even the United States or South America.

It has also been reported that Ngati Kahungunu iwi has said it will lodge a claim over New Zealand’s second-largest aquifer. It is reported that Ngati Kahungunu claims the rights and interests in the waters of “their” aquifer had never been lawfully extinguished.

For the avoidance of doubt I should make clear my Government is seeking advice as to whether – in subsequent legislation – those “rights and interests” should simply be extinguished. Some will say this is a step towards the nationalisation of this resource. And indeed this is something I am giving serious consideration to, along with the wind, the stars, the moon, magma, sunlight and even the internet.

Mr Speaker, it is also notable that Winston Peters – who is also part-Maori – has suggested that all New Zealanders pretend to be Maori to get special privileges under the law.  I have to say that as the son of recent immigrant parents, Mr Peters’ suggestion has some appeal.  But as Prime Minister of New Zealand I must stand above my personal interests.

What I am asking this House for is the ability to vest natural resources in a Crown-managed entity while my Government – and subsequent Governments – take the necessary time to negotiate with individual Maori tribes on proven claims. We envisage this will take many decades to settle. But in the meantime Governments will be free to get on with the business of governing New Zealand in all our interests.

Anything else is an abrogation of the Government’s responsibilities.

It’s the nationalisation both implicit and explicit in this piece that offends the sensibilities of those who believe in private property.  But there are precedents for initial nationalisation of resources, followed by a devolved sell-down to private owners.  That’s a pragmatic and practical way forward we could endorse wholeheartedly.  

Catching Australia, Part II

The “Luck” Won’t Last

Just how substantial is Australia’s competitive advantage.  Huge–in every respect.  At least that is the received wisdom.  But some Australian’s beg to differ. 

Here is a decidedly negative view out of Sydney.  See what you think.

Nation brainwashed by cult of boom

Peter Hartcher
November 5, 2011 

It’s entered into the culture. ”If I get sick of this, I’ll move to Western Australia and get a job driving a truck.” The mining boom has provided us with a frontier of last resort, a modern gold-rush romance, a western adventure fable for the frustrated urban middle classes.

It’s based on stories of unskilled suburban 19-year-olds chancing into mining towns to be offered $120,000 a year driving trucks, on reports of looming labour shortages in the industry, and on the mind-boggling profits of the big companies. BHP Billiton, for instance, made a profit of less than $6 billion two years ago. This year it declared $23 billion, the size of the economy of the oil sheikdom of Bahrain.

For most of us, the western adventure option is spoken in jest or exasperation. Which is just as well. All the elements of the vision are based on reality, but we’ve put them together to create a dangerously inflated picture of the opportunity. As a nation, we’ve turned it into a modern white man’s cargo cult.
And the truth is only slowly dawning on us that while the boom is a source of wealth, it’s also Australia’s biggest economic problem.

Cargo cults sprang up in some Pacific islands after the Second World War. Misunderstanding the origins of the cargo that came down from the skies in US and Japanese war supplies, and wanting them to come back after the soldiers were long gone, some tribes continued to look skywards for miraculous reappearances of food, medicine and weaponry.  Instead of using their time productively to supply their needs, the followers of at least half a dozen surviving cults carry out rituals in the hope that it will bring the unearned deliveries of bounty back. . . .

We sneer at such ignorance. But consider our own irrationalities when it comes to mining. A poll by Essential Media in September asked Australians to nominate the three industries that are ”the most important for Australia’s economic future”. Number one was mining with a score of 67, second agriculture with 58, and tourism with 46, Next came manufacturing with 37, construction 25 and finance 21.

But this impression is based on a hugely exaggerated idea of the size of the mining sector. In a survey in the same month, the Australia Institute asked people to nominate the size of mining in the overall economy. The average response was 35 per cent.  The reality? Last year mining and energy – all the coal, iron ore, gold, bauxite, oil, gas, copper, uranium and everything else – accounted for 8.4 per cent of economic output, or gross domestic product, according to the Bureau of Statistics. That made it smaller than the finance industry, smaller than manufacturing.

Similarly, people told the pollsters that they thought mining employed about 16 per cent of all Australian workers. The reality? Last year the mining and energy sector employed 1.5 per cent of the workforce, according to the the bureau. Far from being one of the biggest employers, that made it the second smallest of the 19 categories used by the bureau. Even the arts and recreation services category employed more workers. . . .

This is not to argue that mining is unimportant. It is important, of course. Its greatest value is in earning export income – mining and energy account for more than half Australian exports. It’s just that it’s not anywhere near as important as Australians think it is. . . .

(M)ining booms are inherently erratic. You cannot base a national economy on a phenomenon that arrives unpredictably in a great rush and then disappears again some years later. This is the fifth big mining boom in Australian history. The others all ended, usually in an ugly bust. The longest ran for 15 years.

As one of the giants of mining, Sir Arvi Parbo, has reflected on his 60 years in the business: ”During my time in the industry the supply and demand of minerals were in a steady state for only relatively short periods … Most of the time – the ‘normal’ environment, if you like – it was either a boom or a bust.”  Planning a national economy in expectation of a mining boom is like taking your surfboard down to the beach to wait for a tsunami. It might never arrive. And even if it does, it’s not necessarily the best thing that’s going to happen to you. You might get smashed if you’re not very careful.

And that’s exactly what’s happening to Australia, and why the mining boom is the biggest economic problem facing the country.

It’s an old syndrome with a number of names – the resources curse, the Dutch disease, the Gregory thesis after the Australian economist Bob Gregory. It’s been on dismal display in many countries for centuries.
It works like this. The great surge in demand for energy or minerals pushes their price way up, and this carries the national currency with it. That’s the main reason the Australian dollar, which has averaged about US77¢ since it was floated in 1983, has been trading roughly between $US1 and $US1.10 in the past year or so.
That’s all to the good if you’re planning an overseas trip, but it’s devastating if you’re an exporter in any sector outside mining. Because the high value of the currency puts you at a price disadvantage to your competitors from other countries. Australia’s third biggest export, after coal and iron ore, is education. Fifth biggest is tourism. But they are suffering acutely with the Australian dollar at these levels. It’s one of the biggest cost problems facing Qantas.

Manufacturing is taking an absolute hammering too. Look at the news this week of the plight of the Holden Commodore. Not only is it tough to export with the currency so high. It’s also tough to compete in your home market against imports, which become much cheaper measured in Australian dollars.  We know what this means. The Treasury has told us. Over the next nine years, Australia will lose 170,000 manufacturing jobs if the mining boom continues as it is. That’s almost double the pace at which the sector lost jobs in the past decade. The mining boom is great for mining but crippling for others.

The rush to extract as much coal seam gas as possible is another example of the complicating costs of a mining boom. The growing friction between farmers and miners over use of prime agricultural land for gas extraction has drawn attention to the problems that can occur when hyper-pressurised water and chemicals are forced into the ground to open cracks, potentially contaminating water tables.  It’s a growing problem internationally. In yesterday’s paper was news that this practice, ”fracking”, was probably responsible for what seismologists initially thought to be two minor earthquakes in north-western England this year.

It was our cargo cult attitude to mining – ”It’ll solve all our problems, so all hail the mining industry!” – that drove Donald Horne to distraction. It was our resource complacency that drove what he called ”the lucky country mentality” after the name of his 1964 classic, The Lucky Country.  In the last interview of his life, in 2005, he took great satisfaction from the reform and prosperity of the Australian economy since he wrote the book. But he told me: ”It’s quite appalling to discover people saying today that Australia is still the lucky country because we have all these minerals. There’s still a bloody lucky-country mentality!”

He’s right. . . . (D)on’t plan your future around that truck-driving job. The giant yellow trucks the miners are now trialling are fully automated. No driver required.

Peter Hartcher is the Sydney Morning Herald political editor.

>More Swamps Than Christchurch

>The Liquifaction of the Left

One of the most destructive carnards concreted into the mind of greenism and environmentalism is the proposition that natural resources are fixed, finite, and limited. Once gone, they are gone forever. Therefore, conservation of said resources is a moral imperative.

Statists warm to this proposition reflexively, that is, without thinking. To conserve on a grand scale requires big government: to regulate, limit, control, restrict, order, prescribe, proscribe, and ban. Without such a big intrusion into the lives and endeavours of citizens, disaster will fall upon the entire race. Therefore, statists join the moral crusade. Advocating for big-brother government suddenly makes one morally good. Saving the planet and saving humanity has a nice moral ring to it, making big government itself a moral imperative.

Socialists likewise find the proposition of limited resources needing to be conserved a convenient doctrine. It justifies pre-emptive property rights of the state over private citizens. It also gives moral cover to advocating for more government taxation and expropriation to fund things like “green industries” and “green energy”. You just have to take a glance at President Obama’s “new” energy strategy. Instead of “drill, baby drill” it is “spin, baby, spin”, referring of course to the windmills he is spending billions of dollars worth of citizen’s property to manufacture and deploy.

So, we have the ideological Grand Coalition of our times: greenists, environmentalists, statists, and socialists. Ladies and gentlemen put your hands together for “the Left”.

There is one small problem. This monumental intellectual and political construction is built upon a simple fallacy, known as the fallacy of composition. It beggars belief that in a world self-proclaimed to be so smart and so rational that the very same wise-in-their-own-estimation are actually operating with a grand intellectual and political edifice built on more swamps than Christchurch, or more volcanoes than Auckland.

The fallacy of composition assumes or asserts that the attributes of the parts must sum to the attribute of the whole. In this case, since each specific natural resource is clearly finite, natural resources as a whole must, therefore, be finite. Once you explode this childish error, the modern moral edifice for greenism, statism, and socialism is largely exploded, revealing beneath the actual rictal grin of an immoral lust for control and power over the earth and mankind. Babylon redivivus.

So, let’s explode the fallacy. It was neatly done by Sheik Yamani of OPEC when he ironically opined that the steam age did not end for lack of wood (a finite natural resource); the coal age did not end for lack of coal; nor will the oil age end for lack of oil. Technological advances made steam and coal redundantly superfluous. The whole is gloriously far more than the sum of the parts in this case.

To change the analogy: imagine a dining room table on which a finite number of apples is placed every evening for the meal. More and more people come to eat every evening so it is obvious that the size of everyone’s meal will reduce, assuming everyone gets a turn at the table. Until one evening, the table has not just apples, but oranges on it. Then pears are added. Then . . . you get the point. While each of the foods is finite and limited, by being able to add more types of foods, the supply of food becomes functionally limitless. The attributes of the part are not necessarily the attributes of the whole. Schoolboy error.

At this point the Grand Coalition usually retreats to moral mutterings about the need to be prudent, and careful, and risk-averse. All of those Yamani examples are in the past. We face the future. The planet is at stake. It more prudent to conserve rather than consume, we are gravely told. In fact the opposite is more likely. The more society conserves, under the nannying aegis of the Grand Coalition insisting on what’s best for us all, the less likely replacements are to be found through technological innovation, enterprise, creativity, and skills. In other words the Grand Coalition’s doctrine of finite resources requiring conservation becomes a self-fulfilling prophecy. The Grand Coalition gets for us all what it has asked for.

Now we know there is currently no shortage of oil in the world. But there is an actual shortage of supply because the Grand Coalition insists upon restricting it. Facing the apples on the table, believing that starvation awaits, the Coalition insists on reducing the number of apples available and putting some into storage (for when the apples run out). The only people benefiting from this nannying prudishness are the apple growers, who find that the price of their apples rises and rises, because they are now in “shorter” supply. “See, we told you that was going to happen,” shriek the harridans of the Grand Coalition.

The Wall Street Journal has just provided us with a perfect case study of the myopic, ignorant stupidity of the Left and the great damage they do to mankind. It is a case of technological innovation that looks to make oil increasingly redundant. It is but one illustration of how, when it comes to natural resources, the whole is very definitely far greater than the sum of the parts.

In the early 1980s, George P. Mitchell, a Houston-based independent energy producer, could see that his company was going to run out of natural gas. Almost three decades later, the results of his effort to do something about the problem are transforming America’s energy prospects and the calculations of analysts around the world.

Back in those years, Mr. Mitchell’s company was contracted to deliver a substantial amount of natural gas from Texas to feed a pipeline serving Chicago. But the reserves on which he depended were running down, and it was not at all clear where he could find more gas to replace the depleting supply. Mr. Mitchell had a strong hunch, however, piqued by a geology report that he had read recently.

Perhaps the natural gas that was locked into shale—a dense sedimentary rock—could be freed and made to flow. He was prepared to back up his hunch with investment. The laboratory for his experiment was a sprawling geologic formation called the Barnett Shale around Dallas and Fort Worth. Almost everyone with whom he worked was skeptical, including his own geologists and engineers. “You’re wasting your money,” they told him over the years. But Mr. Mitchell kept at it.

The payoff came a decade and a half later, at the end of the 1990s. Using a specialized version of a technique called hydraulic fracturing (now widely known as “fracking” or “fracing”), his team found an economical way to create or expand fractures in the rock and to get the trapped gas to flow. . . .

As late as 2000, shale gas was just 1% of American natural-gas supplies. Today, it is about 25% and could rise to 50% within two decades. Estimates of the entire natural-gas resource base, taking shale gas into account, are now as high as 2,500 trillion cubic feet, with a further 500 trillion cubic feet in Canada. That amounts to a more than 100-year supply of natural gas, which is used for everything from home heating and cooking to electric generation, industrial processes and petrochemical feedstocks. . . .

In the energy industry, use of the new technology quickly gathered speed. The know-how was applied across North America, in such shale formations as Haynesville, mostly in Louisiana; Eagle Ford in South Texas; Woodford in Oklahoma; Horn River and Montney in British Columbia; Duvernay in Alberta; and the “mighty Marcellus,” the huge formation that spreads from Pennsylvania and New York down into West Virginia.

Gas output rose dramatically, and the anticipated shortfall turned into a large surplus. As the volume rose, the inevitable happened—prices came down. Substantially. Today, natural-gas prices are less than half of what they were just three years ago.

Suddenly there are not just apples on the table, but now oranges. This pattern has been repeated for centuries. The only impediment is the wowsers of the Grand Coalition, who believe they know what is best for us all. Bless their little cotton socks.

When Christians realise the entire edifice of the Grand Coalition rests upon a basic schoolboy error in inductive reasoning the more distasteful the niggardly faux morality of the Grand Coalition becomes. Moreover, as Christians come to understand and believe in the superabundant generosity of the Living God manifested in the reckless, prodigal, super-abundance of His creation for our exploitation and enjoyment, the insult to the injury becomes detestable.

>Money, Greed, and God–Part IX

>An Inexhaustible Resource

The eighth myth—and last of the economic myths discussed by Richards in his book Money, Greed, and God: Why Capitalism is the Solution and Not the Problem is the Freeze Frame Myth which assumes that natural resources in aggregate are fixed and limited and that eventually the human race is going to run out of them.

This is a very important chapter. Much of modern apocalyptic scaremongering turns around the belief in the finite nature of resources. The world will be in crisis when oil runs out, for example. Or, water will become all used up and all living things will die.

Most often this myth is related to scaremongering about population growth—the more people, the more quickly scarce natural resources will be consumed.http://rcm.amazon.com/e/cm?t=jtertullian&o=1&p=8&l=bpl&asins=0061900575&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr It appears such a common-sense assertion that once uttered, few doubt its truth. The solution usually offered is to restrict and control population growth by persuasion or compulsion, and to lower living standards so that everyone consumes less, thereby conserving for future generations.

Richards writes:

Whenever I speak about environmental issues, I always get asked about the “fact” that we’re depleting the earth’s resources. But it’s not a fact. The truth, despite untutored common sense, is just the opposite. As long as we can preserve our economic freedom and the spirit of enterprise, we will not use up all our resources, nor will be run out of food, water, or energy. (Richards, p.185)

There are two kinds of natural resources—renewable and non-renewable. Trees are an example. Water is another, since it is naturally recycled. Other resources, such as oil, are finite and non-renewable. Once all the oil is used up, that’s it—at least as far as oil is concerned. But some qualifications are required.

In the first place, we do not know how much copper, gold, iron, or oil resources exist. All we know at any one time is what we know. Discovering additional reserves costs money. What is very clear, however, is that when consumption rises or supplies shrink, the price increases. Higher prices justify funding additional exploration, mining and extraction. In addition, known sources of oil (for example oil-shale and oil sands) which hitherto have been ignored because of higher costs of extraction suddenly become economic to exploit with oil prices being higher.

Known reserves tell us how much it’s worth to know about right now, not how much total oil there is to discover or exploit. We can be confident that we’re nowhere near running out of oil simply because oil companies aren’t hoarding oil and the price of gasoline isn’t a million dollars a gallon. (Richards, p.187)

Moreover, as prices for oil rise, investing in substitutes becomes economically justified. So, alternative energy sources are investigated and developed. (No government initiatives or plans or programmes are required.) Under the personal property and free trade system that’s what has always happened. Everybody that shops in the supermarket looking for the best deals understands this dynamic. So, as prices for oil rise, so does its supply as new and known reserves are exploited. Moreover, new (replacement) sources of energy are discovered and developed.

In fact, people in every era of recorded history have worried about running out of whatever resource they’re using at the time. England began to experience lumber shortages in the 1600’s. They got so severe in the 1700’s tha the island came close to being stripped of its forests. People feared a complete loss of wood. So what happened? Wood became too costly to use as a fuel in most places. That encouraged innovation with other resources, like coal. The English eventually switched to coal, and over time, English forests returned. . . .

So after the switch to coal, did all of England rest easy and quit worrying about running out of resources? Hardly. In 1865, a prominent social scientist named W. Stanley Jevons wrote a book proving to his satisfaction that England would soon exhaust its coal, and the economy would grind to a halt. It didn’t happen, and there’s still plenty of coal available more than 140 years later.

Did such experiences teach the doomsayers to qualify their warnings? Nope. The same unqualified claims of disaster quickly emerged with petroleum as well and have continued down to the present, despite one prediction after another biting the oil-stained dust. (Richards, p. 190f)

As Sheik Yamani, founder of OPEC put it, “The Stone Age came to an end not for a lack of stones, and the oil age will end, but nor for a lack of oil”.

Moreover, when it comes to energy, the earth is not a closed system. Every day more energy pours onto the earth’s surface via the sun. But how to harness it—that is the problem? It is always the same problem—and human ingenuity and knowledge and skill is required to solve it. But, with those magic ingredients there currently is, nor will there be, a shortage of resources. A Chinese proverb says, “if you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people.”

We conclude this series of posts, leaving the last word to Richards:

We know market economies grow. So why do we often fall for claims that contradict what we already know? Because we forget what late economist Julian Simon called “the ultimate resource”–the creative imagination of human being living in a free society. The more human beings in free societies there are, the more inventors, producers, problem solvers, and creators there are to transform material resources and to create new resources. Man, not matter, is the ultimate resource.

This is the most important economic truth, and Christians should have expected it all along. It’s ironic that a nonreligious economist like Julian Simon would see that truth so clearly, while so many of our Christian leaders miss it.

One Christian leader who didn’t miss it was Pope John Paul II. In his 1991 encyclical, Centesimus Annus, he said, “Indeed, beside the earth, man’s principal resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied”. Read that again: “Man’s principal resource is man himself”. Grasp that, and you’ll know why we’re not going to run out of resources. (Richards, p. 206,7)

Such a stirring and hopeful reality does not lead us to place our hope in man. For it is God Himself Who has endowed man with such gifts and appointed him as His sub-creator. Remove God from the operating world-view and hope eventually translates into fear and the counsels of despair.That is why , in our day, we live amidst a Culture of Catastrophism and superstitious dread, two hundred and fifty years after the Enlightenment first “banished” God from Nature, and asserted the autonomy of the human mind.