I’ve been thinking…about ways New Zealand can generate more income. In this post I’m talking about oil and gas company royalties and the differences between how Norway, Australia and New Zealand are doing things differently.

Norway found oil. So did Australia. So did New Zealand. Here’s what happened next.

Norway decided its oil and gas belonged to the Norwegian people. They taxed petroleum companies at 78% — capturing the “resource rent” from a public asset. Every dollar went into a sovereign wealth fund. Today that fund is worth NZD $3.8 trillion. That’s enough to give every Norwegian man, woman and child approximately $650,000 each. Norway went from a middle-income country to one of the wealthiest nations on earth — and future generations will benefit just as much as today’s.

Australia had one of the world’s great LNG export booms. At its peak it was the world’s largest LNG exporter. Its tax system — the Petroleum Resource Rent Tax — had a headline rate of 40%, but was riddled with deductions and loopholes so generous that most major LNG projects paid close to zero tax for years. No sovereign wealth fund was ever created. The wealth was extracted, shipped overseas, and largely untaxed. One analysis found that simply replacing the broken system with a flat 25% export levy would raise $17 billion a year — money Australia isn’t collecting.

New Zealand had the Māui gas field — when discovered in 1969, one of the six largest gas fields in the western world. We initially did something smart: the government took a 50% ownership stake. Then we sold it. To Fletcher Challenge. We set royalties at just 5–20% with no resource rent tax. Over 40 years of production from one of the world’s great gas fields, NZ collected roughly $5–8 billion total in royalties. We have no sovereign wealth fund. Not a cent set aside for future generations.

To put that in perspective: if New Zealand had applied even a fraction of Norway’s approach, we could conservatively be looking at a sovereign wealth fund of $100–200 billion today — enough to fund our entire health system for a decade, build world-class infrastructure, and insulate future generations from the fiscal pressures we’re now worried about.

Instead, we sold our stake, set low royalties, watched the profits leave the country, and then in 2018 banned future offshore exploration — ensuring there will be no second chance to get it right.

Norway asked: who does this resource belong to?

Australia and New Zealand never really answered that question.

And our children will pay the price.

💬 What do you think — should NZ have followed the Norwegian model? Drop your thoughts below.