Roman Travers: Is mining the best way to boost New Zealand's economy?

The Sunday Session with Francesca Rudkin

Productivity is at all all-time low in New Zealand. Possibly not the most uplifting thing you’ve heard this morning, but sadly, it’s true.

In the year ending March 2023, New Zealand saw a drop in labour productivity by 0.9%, marking one of the biggest falls in recent years. 

As a nation, we’ve struggled for decades to improve our productivity levels, despite politicians of all shapes and colours promising solutions.

One of our leading economists, Doctor Eric Crampton, describes productivity nicely. He says the economy as being a bit like a commercial kitchen.

If you take the same set of workers, equipment, and ingredients, and reconfigure the kitchen so that everything runs more smoothly and more patrons can be served, that's a productivity increase.

Coming up with new and tastier recipes using the same amount of ingredients and effort - that's also a productivity increase.

For economists, productivity isn't about making everyone work harder.

It's instead about finding better ways of doing things, better processes, and discovering new products and services that provide more value for the same amount of time, effort, and materials.

So… because we appear to be consistently useless in the productivity kitchen, once again, we’re talking about get rich quick schemes for New Zealand.

And at the coalface of all the desperation to do better, to make more money and to get New Zealand back in the black - is mining.

So what’s mining worth to New Zealand? Mining makes a significant contribution to the New Zealand economy, particularly in the regional areas where mining takes place.

7,000 people are employed in the extractives sector and the economic contribution is $2.61 billion to GDP annually.

It’s fair to say that mining products make a major contribution to New Zealand and its economy. But how does that compare to tourism? Mining is all about taking, exploiting the land and digging your way to the bottom of a limited commodity.

Before COVID-19, tourism was New Zealand's largest export industry and delivered $40.9 billion to the country. 40.9 billion - compared to mining with 2.61.

Tourism made a significant positive impact on many of our regional economies supporting employment by directly employing 8.4 percent of the New Zealand workforce. Mining employs about 7000 people.

It’s pretty obvious that those numbers could well and truly be increased for mining if we completely lost our collective marbles and allowed more of the massive overseas owned companies to come here and ‘dig baby dig’ or 'drill baby drill' - or to expand on what they’re already doing.

What’s more obvious to me though, is the yet to be realised ability to increase tourism numbers, to get more people interested in coming to New Zealand with their strong currencies, deep pockets, and desire to buy what we have on offer.

We have to remember that one of the key reasons why tourists want to come here, is that we haven’t yet completely destroyed the ecological aspects that make this great nation so unique and desirable.

News travels fast - and if we expand upon the very businesses that have left parts of the world looking like a post-apocalyptic movie set, then we effectively kill the kiwi that consistently lays the very large golden eggs.

Do we want to be compared to the Pilbara Region of Western Australia?

It’s time we thought about the longevity of tourism and the very limited lifespan of mining, so that we can collectively orchestrate the best path forward economically. For all New Zealanders, not just those who scratch the backs of politicians, with the questionable expectations that follow.

Tourism is the closest we’ll ever get to making New Zealand rich with the ‘take nothing but photos, leave nothing but footprints’ ethos.

There’s no way the same can be said for mining.

No matter how the industry tries to dress the concept up. Stick it in high heels, give it a coat of makeup, or a designer dress - it’s still ugly.

Any increase to mining is quite literally a race to the bottom.

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