Alongside other Otago mayors and the regional council chair, I got to spend an hour with Minister of Local Government Simeon Brown on Thursday and I used the opportunity to make a point to him using a local scenario.

As you are likely aware, a new gold mine is being proposed at Tarras. Normally I wouldn’t comment in any way that could be seen as for or against on something that is awaiting consent locally as the organisation I head is usually the consenting authority, but in this case it is pretty obvious that the new fast track legislation, which councils do not run, will be used.

The story came from a discussion with another Minister who commented to me how wonderful it was for the CODC that a mine with an estimated $9b in gold could be opening in the area. 

I asked him why it was good for the council, given that central government will take the GST, the PAYE, the fuel tax on fuel used and the crown minerals royalties payable under the law. 

I asked that because, compared to central government, your council will get very little. 

Sure, we will get more ratepayers but that isn’t a problem at the moment, in fact dealing with the pressures of our on-going growth is a real challenge, and I’m sure the land the mine is on will have a higher rateable value but outside of that though, we get nothing.

I suggested to Minister Brown that, given the money that will come into the Government coffers through the royalties is “found money”, money the Government hasn’t already counted on, how about a portion, let’s say half, comes to the council in the area the gold comes from?

I’m using back of the napkin figurings here so they are indicative only, but the royalties to the Crown are 2% of net profit on gold and of course I have no way of knowing what the actual profit is. 

But, let’s say the mine makes what I would think is a very conservative 10% profit on its output. Half of two percent of 10% doesn’t sound much until its applied to $9b. By my covid-muddled reckonings, that’s $9,000,000 which, if the gold lasts 30 years, is $300,000 a year. I don’t think any council would say “no thanks” to an injection like that every year.

Minister Brown gave me little hope that the Beehive will be sharing its windfall any time soon unfortunately, but I’ll keep trying. 

As our looming rates increase, not just here but across the country shows, the current funding model is unsustainable and innovative ways need to be found to fund local government. We also need to find a government willing to listen and given we have had 150 years of the same broken model being used, surely it’s time for that tide to turn.