'Special Economic Zones' or energy precincts could be established to strengthen New Zealand's fuel and energy security, according to the Government.
Cabinet will consider a range of options in the first half of this year.
Associate Energy Minister Shane Jones says special economic zones - areas with less regulations - are already used widely overseas.
Infometrics Principal Economist Brad Olsen unpacks whether or not this is the way forward.
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Speaker 1 (00:00):
The government is considering a special economic zone for Marsden
Point that would reduce red tape to parently help turn
it into an economic winner. Brad Olsen is the Informetric's
principle economist who's back with us on this.
Speaker 2 (00:12):
Hi, Brad, good evening.
Speaker 1 (00:15):
So these special economic zones. We've spoken to the minister,
that's Shane Jones earlier on the program about this, his
ideas for it. What do you reckon?
Speaker 2 (00:23):
Oh, look, it's always encouraging to think about the economic
growth potential coming through And look, I'm a Northander so
definitely understand all of that. But I really would hope
that if we can figure out how to make some
of these different proposals work in a special economic zone,
surely we can make them work for like the entire country.
And it would be better probably to do that more
broadly than to do it sort of at a more
(00:45):
specific zone by zone function. I mean, the worry I
guess I have is that you start to create winners
and establish losers if you have certain you know, more
business friendly regulations or different regulations that you don't have
to do within a special economic zone, but you still
have to do in other parts of the country. It
sort of does make other parts of the country less competitive.
It would be better, I suggest to, you know, try
(01:07):
and lift all boats or to eliminate all of those
regulations everywhere. If you can do it in one zone,
you probably should just do it everywhere. Overall.
Speaker 1 (01:14):
Countries that do this tend to be massive. You know,
We're quite small, so it would seem odd to have,
you know, an arbitrary line between around a port basically
and NORTHLND.
Speaker 2 (01:26):
Yeah, exactly. And I think, you know, also for other
areas around the country where they might be going, well, geez,
you know I've got a port, can I have one
of these as well? And then okay, so you extended
out to all the ports, and then the airports want them,
then the inland ports want one, and at that point,
why don't you just sort of do it wholesale? I mean,
I think as well. Part of this is, I think,
is around the government wanting to test out some of
(01:47):
these options and hopefully using it as a bit of
an approving ground for how they might be developed out further.
And if that's the case, I can buy that justification
a lot more. But I think also, you know, looking ahead,
it would better if we can figure out a way
to make these sort of proposals work, then you do
have a much more expensive option. The work that government's
doing though around Marsden Point or thinking about around the
(02:09):
likes of fuel security. I do think that's important. I mean,
some of the analysis that the government's put out today
suggests that, you know, we can only cover about a
third of our usual amount of fuel use across the country.
If we had no fuel supply for ninety days, that's
two thirds of economic activity and transporting stuff around that
(02:29):
we wouldn't be able to do so. Aside from the
special economic zones, which you hope can broaden out, some
of this work on fuel security is going to be important.
It might be costly, but I think it's worth the conversation.
Speaker 1 (02:40):
The other thing that comes with it's not just better
regulational easier regulations than especially economic zones, is potentially tax
breaks as well. How do you reckon that it go down?
Speaker 2 (02:49):
And I think that's where a lot of other businesses
will sort of start to probably rightfully complain and go, well,
how come we can't get that as well? You know,
we're good hard earning export businesses throughout the country and
trying to do different things. You know what, why do
we have to uproot ourselves from different areas. So again
I can take the point that maybe it's a bit
more of that test case and that over time it
(03:11):
can sort of widen out. But I do think that there,
you know, could be some very valid complaints for people
going well, actually, surely we should do this across it
if we can make you know, some sort of tax
breaks and similar work for certain industries or certain parts
of the country. I sort of feel like you should
do that broadly. Put it this way, I don't think
we've got the time or the effort here in New
Zealand to be able to sort of make these very
(03:32):
minute decisions over what P on the map gets sort
of you know, certain economic advantages and not surely we're
small enough where we should be able to do it
wholesale across the country. If it's good enough for one area,
it's good enough for the rest of us.
Speaker 1 (03:45):
Yeah, good point, Brad, Thanks so much for that. Brand
Olsen from Informetrics with us as the principal economist There
for more from Heather Duplessyl and Drive Listen Live to
news talks, it'd be from four pm weekdays, or follow
the podcast on Heart radio
The government is considering a special economic zone for Marsden
Point that would reduce red tape to parently help turn
it into an economic winner. Brad Olsen is the Informetric's
principle economist who's back with us on this.
Speaker 2 (00:12):
Hi, Brad, good evening.
Speaker 1 (00:15):
So these special economic zones. We've spoken to the minister,
that's Shane Jones earlier on the program about this, his
ideas for it. What do you reckon?
Speaker 2 (00:23):
Oh, look, it's always encouraging to think about the economic
growth potential coming through And look, I'm a Northander so
definitely understand all of that. But I really would hope
that if we can figure out how to make some
of these different proposals work in a special economic zone,
surely we can make them work for like the entire country.
And it would be better probably to do that more
broadly than to do it sort of at a more
(00:45):
specific zone by zone function. I mean, the worry I
guess I have is that you start to create winners
and establish losers if you have certain you know, more
business friendly regulations or different regulations that you don't have
to do within a special economic zone, but you still
have to do in other parts of the country. It
sort of does make other parts of the country less competitive.
It would be better, I suggest to, you know, try
(01:07):
and lift all boats or to eliminate all of those
regulations everywhere. If you can do it in one zone,
you probably should just do it everywhere. Overall.
Speaker 1 (01:14):
Countries that do this tend to be massive. You know,
We're quite small, so it would seem odd to have,
you know, an arbitrary line between around a port basically
and NORTHLND.
Speaker 2 (01:26):
Yeah, exactly. And I think, you know, also for other
areas around the country where they might be going, well, geez,
you know I've got a port, can I have one
of these as well? And then okay, so you extended
out to all the ports, and then the airports want them,
then the inland ports want one, and at that point,
why don't you just sort of do it wholesale? I mean,
I think as well. Part of this is, I think,
is around the government wanting to test out some of
(01:47):
these options and hopefully using it as a bit of
an approving ground for how they might be developed out further.
And if that's the case, I can buy that justification
a lot more. But I think also, you know, looking ahead,
it would better if we can figure out a way
to make these sort of proposals work, then you do
have a much more expensive option. The work that government's
doing though around Marsden Point or thinking about around the
(02:09):
likes of fuel security. I do think that's important. I mean,
some of the analysis that the government's put out today
suggests that, you know, we can only cover about a
third of our usual amount of fuel use across the country.
If we had no fuel supply for ninety days, that's
two thirds of economic activity and transporting stuff around that
(02:29):
we wouldn't be able to do so. Aside from the
special economic zones, which you hope can broaden out, some
of this work on fuel security is going to be important.
It might be costly, but I think it's worth the conversation.
Speaker 1 (02:40):
The other thing that comes with it's not just better
regulational easier regulations than especially economic zones, is potentially tax
breaks as well. How do you reckon that it go down?
Speaker 2 (02:49):
And I think that's where a lot of other businesses
will sort of start to probably rightfully complain and go, well,
how come we can't get that as well? You know,
we're good hard earning export businesses throughout the country and
trying to do different things. You know what, why do
we have to uproot ourselves from different areas. So again
I can take the point that maybe it's a bit
more of that test case and that over time it
(03:11):
can sort of widen out. But I do think that there,
you know, could be some very valid complaints for people
going well, actually, surely we should do this across it
if we can make you know, some sort of tax
breaks and similar work for certain industries or certain parts
of the country. I sort of feel like you should
do that broadly. Put it this way, I don't think
we've got the time or the effort here in New
Zealand to be able to sort of make these very
(03:32):
minute decisions over what P on the map gets sort
of you know, certain economic advantages and not surely we're
small enough where we should be able to do it
wholesale across the country. If it's good enough for one area,
it's good enough for the rest of us.
Speaker 1 (03:45):
Yeah, good point, Brad, Thanks so much for that. Brand
Olsen from Informetrics with us as the principal economist There
for more from Heather Duplessyl and Drive Listen Live to
news talks, it'd be from four pm weekdays, or follow
the podcast on Heart radio
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