Conclusion
New Zealand is facing increasing pressures on its natural resources and will need to use a wider range of tools to manage conflicting demands. Those tools will include the charging of royalties on “Crown” or “public” natural resources; i.e. those natural resources owned or managed by central government on behalf of New Zealanders.
Applying such tools requires a clear goal such as to ensure that New Zealanders receive maximum net benefits directly or indirectly from the use of their resources. This logically translates to an overall design principle that a royalty regime should aim to ensure that any given resource is allocated to its highest value use (in the widest sense of value) and allow for that allocation to adjust over time as appropriate.
More detailed design principles include avoiding distorting the behaviour of resource users, reflecting externalities in decisions, being fair and consistent, and explicitly identifying circumstances where charging may not be appropriate and rigorously assessing whether that is actually the case before granting exemptions.
Whether or not the goal and principles proposed are generally accepted, an explicit debate should improve the final outcome in such an important policy debate. Another explicit debate would also be desirable on proposals to tie the resulting revenue to specific activities, given the long-term costs of such arrangements but the ongoing demand for them.
