June 19, 2017
Looming large in the Mandate of the Government of the Northwest Territories 2016-19 is the development of a new Mineral Resources Act (MRA) — a major objective of the post-Devolution period.
With billions of dollars’ worth of resources below its surface, and the significant needs of residents above it, it is important the GNWT gets natural resource governance right.
In a field as complex as natural resource governance, that means embracing global
expertise to help guide the process — a common practice amongst national and sub-national jurisdictions.
Enter Andrew Bauer — the Department of Industry, Tourism and Investment’s choice to coordinate the research and engagement sessions kicking off the legislative process.
Bauer is a resource governance specialist who has held government, non-profit, and private sector positions. Governments around the world have drawn from his expertise to overhaul and improve their natural resource management.
We sat down for a Q+A session with Bauer to help demystify resource governance and explain why it matters for everyday people.
Q: What is the objective of good natural resource governance?
A: From an economic perspective, the main point of petroleum or mineral production—that is, removing a finite asset from the ground—is to generate benefits that make people’s lives better.
The most important question we have to ask ourselves is, “How are residents as a whole, especially those most disadvantaged, benefitting from oil, gas or mining activities?”
The principal goal of government is to use the revenues generated by oil, gas or mining to pay for the things that people need most: education, clean water, power, transport, healthcare and other infrastructure and social services. This means generating adequate revenues from industry and spending those revenues responsibly and effectively.
Good governance also means creating new opportunities from this development - investing in the infrastructure and training necessary to support a thriving resource industry, but also directing funds to foster growth across all sectors of the economy.
Q: Why should average people be concerned with natural resource governance?
A: How governments manage resource development can make-or-break an economy; it can bring new opportunities or limit them. Mining generates billions in revenue, but how much of that is actually being realized by those living in mining jurisdictions? Good natural resource governance schemes aim to benefit the people served by the government.
Q: How important is legislation to capturing the full benefit of natural resource development?
A: Legislation is key to maximizing both fiscal and non-fiscal (e.g. jobs; skills) benefits from resource development. A good piece of legislation can make the difference in transforming an economy for the better.
Q: Do you have an example of a jurisdiction transformed by good natural resource governance practices?
A: The first example which springs to mind is Chile. Chile’s massive copper resources have sustained a strong resource sector for decades. But their natural resource governance fiscal regime was well-designed and implemented, meaning the government collects a fair share of copper revenues. These revenues have been channeled into public education and infrastructure; and they have been used to diversify the economy.
Q: What role does transparency play in the field of good natural resource governance?
A: Transparency is helps build trust between the government, companies and mining-affected communities. Transparency can also promote an informed dialogue.
In the natural resource governance field, transparency can refer to information on exploration and production companies for purposes of monitoring; geological information so governments and companies can make informed decisions; clear regulations and policies; environmental and social costs and benefits; and public disclosure of financial information — like payments from companies to governments. These are all areas we look to address when advising on new governance regimes.
Q: What, in your view, will be the measure of success?
A: The GNWT is working to establish a strong legal framework with clear rules and responsibilities upfront tailored to the needs of the NWT. This means ensuring a regime that encourages exploration and investment, while protecting the environment, respecting local claims, and generating adequate revenues and other benefits for the territory. It also means using those revenues to support sustainable economic development. This is what was top-of-mind as we moved through the initial consultations and research in support of the new Mineral Resources Act.