Source: NZ Herald, Matthew Hooton 14-June-24
Matthew Hooton is on the money in this Opinion piece. He stated three key facts:
New Zealand’s gross debt is set to increase by $212 billion between 2008 and 2028.
Fifty years ago, Norway decided to assure the sustainability of its welfare state and low taxes by drilling for oil.
Now, the Norwegian government’s share in state-owned oil giant Equinor is worth around five times the commercial entities and shares owned by the New Zealand Government.
Matthew took aim at both National’s Sir John Key and the Ardern Labour Government for the soft debt options that highlighted this era. He said with Sir Bill English as Finance Minister New Zealand’s debt ballooned by $56bn over 8 years – and under Grant Robertson’s term as Finance Minister it was even worse, borrowing $90bn over 5 Budgets. Matthews says that Nicola Willis, as the current Finance Minister, is heading in the same direction.
Unfortunately, we have continued in a productivity spiral downwards for the last 20 years and, if we don’t correct this and don’t find a way to repay our debt then New Zealand is fast heading towards a Third World standard of living.
To his credit (and Matthew has shown that he is no friend of the National Party these days) Matthew has suggested a solid solution. He is advocating for New Zealand to use its natural mineral wealth, as Norway did 50 years ago, to turn our economy around. To be fair to National, National Ministers like Energy Minister Simon Bridges also saw our predicament and were heading in the right direction, before Jacinda Arden made her “Captain’s Call” to ban oil and gas exploration – which was the worst decision, based solely on a left-wing ideology rather than good science, and has sent our economy spiralling south.
Hooton offers the Norway solution
His Opinion piece said: Fifty years ago, Norway decided to assure the sustainability of its generous welfare state and low taxes by drilling for oil.
It established a 100% state-owned oil company, Statoil, with the Government also owning 50% of every production licence. Profits went into Norway’s equivalent of our Super Fund.
With external capital, Statoil, now called Equinor, is worth around $140bn, employing 23,000 people in 30 countries.
The Norwegian government’s 70% share is worth $100bn, five times the commercial entities and shares owned by the New Zealand Government. Yet Norway and New Zealand’s populations are almost the same.
Despite that, Equinor has become Europe’s biggest energy provider, wealthy and powerful enough to be leading that continent’s transition to renewable energy.
Norway’s pension fund is even more impressive, now with $2.7 trillion under management. Our Super Fund is worth less than 3% of that. Even throwing in every last KiwiSaver account, New Zealand has saved just 6% as much for our retirements as Norway, despite near-identical populations.
Given climate change, some New Zealanders are squeamish about drilling for oil. Yet Norway achieved economic security producing just 2% of the world’s annual oil. With the US, Russia, Saudi Arabia, Canada, Iraq and China and the four other top-10 producers continuing to increase production, Norway’s contribution to global warming is minuscule and falling.
In any case, New Zealand’s main target isn’t oil but natural gas. To the extent natural gas replaces New Zealand burning coal - imports of which soared under the Ardern-Hipkins regime – extracting and using gas lowers global warming.
If New Zealanders are squeamish even about gas, what possible environmental argument is there against us searching for and extracting whatever undiscovered deposits of copper, chromium, molybdenum, lithium, graphite, titanium, bauxite, iron, nickel and cobalt may lie beneath our land and sea? All are critical to support global moves to renewable energy.
For that matter, what possible climate arguments are there against looking for and mining any uranium or remaining gold deposits? What if we found diamonds?
Norway’s Equinor (formerly Statoil) is developing as a broad energy company, leveraging strong synergies between oil, gas, renewables, carbon capture and hydrogen. Our ambition is to be a leading company in the energy transition, creating value through the opportunities the energy transition brings, breaking new industrial ground by building on our 50 years of experience.
New Zealand must quickly learn from the Norway experience, if we are to survive as a 1st World country. Perhaps we could sell off the Government's Pamu (Landcorp) farms and use that money to fund renewable energy exploration.
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