2016/17 Estimates for Vote Environment

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2016/17 Estimates for Vote Environment Report of the Local Government and Environment Committee Contents Recommendation 2 Introduction 2 Resource management system 2 National

1 2016/17 Estimates for Vote Environment Report of the Local Government and Environment Committee Contents Recommendation 2 Introduction 2 Resource management system 2 National direction 3 Freshwater management 4 Marine protected areas 5 Waste management 6 Environmental reporting 6 Environment centres 6 Climate change 7 Emissions Trading Scheme 7 Appendix 9

2 Vote Environment Recommendation The Local Government and Environment Committee recommends that the appropriations for the year ending 30 June 2017 for Vote Environment, as set out in Parliamentary Paper B.5 Vol. 3, be accepted. Introduction Vote Environment provides funding to support New Zealand s environmental and resource management systems and to further the goal of achieving a low-carbon nation resilient to climate change. The vote also provides funding for the Environmental Protection Authority (EPA). The total appropriations sought for the vote in 2016/17 are $ million (an increase of 18 percent from 2015/16 estimated actual expenditure of $ million). Total final budgeted appropriations for 2015/16 were $ million. Significant appropriations sought under the vote are as follows: $225 million for allocating New Zealand emission units to the New Zealand economy $21 million for water management $21 million for improving the resource management framework $20 million for funding and grants to third parties for water initiatives $19 million for funding for the EPA $19 million for administering the Emissions Trading Scheme (ETS), including the impairment of debt $18 million for payments to local authorities from the Waste Disposal Levy. The vote includes three new policy initiatives for allocating New Zealand emission units related to decisions from an ETS review ($ million allocated for 2016/17), Exclusive Economic Zone regulation under the EPA ($4 million allocated for 2016/17), and the Freshwater Improvement Fund ($2.5 million allocated for 2016/17). The Ministry for the Environment administers the vote. The Minister for the Environment, Hon Dr Nick Smith, and the Minister for Climate Change Issues, Hon Paula Bennett, are responsible for the appropriations within the vote. Resource management system The Minister for the Environment told us that the Government s principal priority is to reform the Resource Management Act 1991 (RMA). Reforms have been included in the Resource Legislation Amendment Bill that we are currently considering. 2

3 The Minister reaffirmed the importance of balancing environmental and economic growth objectives, and we were told that the ministry is also pursuing a more collaborative approach to resolving environmental issues. Resource Legislation Amendment Bill The Minister said that the ministry s newly released National Monitoring System data for 2014/15 justifies the need to reform the RMA. 1 In particular, he highlighted the statistics about the time involved in, and costs of, gaining resource consents. The Minister also noted that the data allows the differing local authority resource management processes to be compared. The Minister highlighted a provision in the Resource Legislation Amendment Bill that would amend the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012, to require companies to prepare to decommission structures (for example, oil platforms) once they reach the end of their productive life. We were told that this provision would mitigate the risk that the Government would need to pay for decommissioning instead of limited liability companies. We were told that, after our report is presented to the House of Representatives, the Minister hopes to obtain cross-parliamentary support to progress the bill through its next stages. The ministry would need to provide assistance to local authorities to implement any changes from the legislation. The Minister noted that this would be a challenge for the ministry. National direction The Minister told us that the Government needs to step up in a number of key areas to provide stronger national direction to achieve better environmental outcomes. The Minister considers that there is broad cross-party support for more national policy statements and national environmental standards to ensure that the RMA framework works better. The Minister said that the National Policy Statement for Freshwater Management 2011 (NPS-FM) is being updated, and that it will be a challenging task for the ministry to convert the broad proposals into specific changes. The Minister pointed out that a project on freshwater resource allocation is also under way. We look forward to seeing the outcome of these pieces of work. We were told that the top priorities for future national policy statements are biodiversity and natural hazard management. Priority areas for new and updated national environmental standards are plantation forestry, pest control, telecommunications facilities, air quality, and soil contaminants. The Resource Legislation Amendment Bill contains amendments that would provide for regulations to give national direction about excluding stock from waterways, as well as for aquaculture. 1 An infographic containing a summary of National Monitoring System data is available here: Ministry for the Environment, 2016, Resource Management Act 1991 National Monitoring System, as at 15 June

4 Biodiversity management Some of us wanted to know why protecting more than 2,000 species threatened with extinction is not a stated focus area for the natural resources sector. The Minister acknowledged that protecting biodiversity is very important for New Zealand s reputation. Although the ministry would investigate a national policy statement on biodiversity, biodiversity management sits with the Department of Conservation, funded under Vote Conservation. We asked why the Minister believed that a national policy statement on biodiversity would succeed, considering that this initiative has been attempted twice before. The Minister is confident that collaboration with the main stakeholders will be the key to success. We will monitor the development of this national policy statement with interest. Urban housing supply We asked the Minister about the proposed National Policy Statement on Urban Development Capacity, which was released in June 2016 for public consultation. The Minister said that this national policy statement will be crucial and aims to address Auckland s housing issues. The Minister said that the national policy statement would set a clear framework requiring local authorities to manage housing supply issues. The Minister noted that it would not interfere with local decision-making processes about the way in which housing is supplied (for example, by building upwards or outwards). We will observe the progress of this consultation with interest. Freshwater management New freshwater fund In May 2016, the Minister announced a 10-year contestable fund of $100 million to help communities improve water quality standards. The 2016/17 budget would appropriate the first $2.5 million of this fund. We were told that work on the criteria for allocating the fund s money is under way. The Minister noted that contracts would not be awarded for single-year projects. Instead, the first competitive funding round is intended to be completed for $24.5 million (four years worth of appropriations) of the $100 million fund sometime next year. The Minister said that the 10-year fund would provide additional funding to improve freshwater quality on top of initiatives such as the Te Mana o Te Wai Fund and the Next Steps for Freshwater Improvement Fund. Some of us support the additional funding to help improve water quality. Some of us believe polluters should not be paid to stop polluting. Opposition members of the committee note that by July 2017 only $2.5 million of the $100 million fund promised over 10 years at the 2014 election would have been spent. Nitrogen levels in waterways Some of us are concerned about the levels of nitrogen leaching into waterways. The Minister told us that the purpose of the current freshwater management programme is to set limits for nutrients. The Minister also noted that limits around nutrient leaching apply in around 20 catchments across New Zealand. 4

5 In 2014, the NPS-FM was amended to include the National Objectives Framework, which established freshwater objectives. The Minister stressed that the National Objectives Framework inserted a minimum toxicity bottom line into the NPS-FM. For periphyton growth, framework requires specific river conditions to be considered. However, the Minister said he has asked for advice on whether stricter conditions can be placed on different types of rivers. Some of us wanted to know why the Land and Water Forum s recommendations to the Government have not all been accepted and implemented. The Minister responded that approximately 75 percent of the recommendations have been implemented or are in the process of being implemented. However, the Minister does not agree with the remaining recommendations, which are not being pursued. Swimmable standard Some of us support a swimmable standard for freshwater instead of the wadeable standard included in the NPS-FM. The Minister considers this to be only one aspect of the policy and noted the requirement for councils to identify specific swimming areas in their region. The Minister is aware that some submitters on the Next Steps for Freshwater consultation have advocated a swimmable standard. The Minister has asked his officials to consider these submissions and to assess whether changes would be preferable. Some of us wanted to know the extent to which scientists are involved in evaluating water quality standards. The Minister said that the Government will continue to liaise with the Land and Water Forum, as well as the National Objectives Framework Reference Group. He told us that the latter is well connected to the science expertise. We were assured that the ministry will engage extensively with scientists about further proposed amendments to the NPS-FM. We were told that, as well as a swimmable standard, a range of options are being analysed for potential inclusion into the NPS-FM. The Minister mentioned the macroinvertebrate community index, which measures the variety of insects and other creatures present in a stream or river, and dissolved inorganic nitrogen, which is the amount of nitrogen available for plant growth. However, we were told there is a range of scientific opinion about the appropriateness of using these measures. Marine protected areas We were informed that there has been much international support for the proposed new Kermadec Ocean Sanctuary, as proposed by the Kermadec Ocean Sanctuary Bill that we are considering. The Minister believes that the sanctuary would be a global contribution to marine conservation from New Zealand. The Minister signalled that the bill is set to be the precursor to another piece of legislation on marine protected areas, due to be introduced in Parliament during 2016/17. We were told that the legislation will effectively replace the Marine Reserves Act We look forward to considering this legislation should it be referred to us for examination. 5

6 Waste management Recycling We were told that the Soft Plastics Recycling Programme launched in July 2015 by the Packaging Forum in Auckland is in the process of being rolled out to other parts of New Zealand. Consumers will be able to dispose of soft plastics in special bins that will be made available at shops and supermarkets. The Minister informed us that responsibility for waste management under the Litter Act 1979 will be transferred from local authorities to the ministry. Hazardous substances We were told that the EPA and Worksafe New Zealand are working together on a complex project about hazardous substances. The Minister indicated that managing hazardous substances will be a challenge for the ministry and its agencies in 2016/17. The Minister said that he was unsuccessful in obtaining a budget bid focusing on the recollection of toxic chemicals; funding for this came from the Waste Minimisation Fund instead. The Minister said that the EPA has also worked with Housing New Zealand to advance a child safety programme. Some of us remain concerned about the EPA s financial capacity for managing hazardous substances, particularly in light of the potential transfer of the management of hazardous substances from local to central government agencies, as proposed in the Resource Legislation Amendment Bill. The Minister reiterated that contaminated site clean-ups are difficult and unpredictable projects. The Minister believes that the Contaminated Sites Remediation Fund will need to be used for a clean-up project linked to Concours Electroplating Limited in Timaru. Environmental reporting The Minister noted that the first marine domain report produced under the Environmental Reporting Act 2015 is due in October and that the first freshwater domain report is expected to be released in March We note the recent presentation of the related Environmental Reporting (Topics for Environmental Reports) Regulations 2016 to Parliament. These regulations set out the topics to be covered by the environmental domain and synthesis reports. Environment and Conservation Science Roadmap The Minister stressed that having good science available is critical to our decisionmaking. In March 2016, the Ministers for the Environment and for Conservation announced a new Environment and Conservation Science Roadmap. It will be a 20-year plan setting out environmental and conservation research targets. We support the creation of this roadmap, which should help assess progress towards environmental goals. We are interested in seeing this document once it is completed. Environment centres We are interested in the progress of environment centres. These provide projects, activities, and services for communities to participate in environmental initiatives. Part of the $3.105 million budgeted for 2016/17 under the Community Environment Fund appropriation would help to support these centres. 6

7 The Minister said that six of the eight centres have had their contracts renewed for a further three years. The Minister hopes that the performance of the remaining two centres will improve, but in the meantime their contracts have been renewed for only one year. Climate change The Minister for Climate Change Issues stressed the importance of making people aware of the costs and benefits of mitigating and adapting to climate change. The Minister believes that changes could benefit the New Zealand economy. The Minister told us that New Zealand needs to contribute to the global response to climate change. New Zealand has set a target to reduce emissions by 30 percent below 2005 levels by 2030, which the Minister considers to be ambitious but achievable. Some of us believe that a more ambitious target is needed. Until now, the Government s position has been that the 2015 Paris Agreement will not be ratified by New Zealand until after the international carbon accounting protocols have been agreed. However, the Minister is awaiting advice about the ratification of the 2015 Paris Agreement, noting that there are advantages and disadvantages to ratifying before the protocols have been agreed. The Minister informed us that, once New Zealand ratifies, we would not be able to reduce our stated 30 percent target. We will watch as this develops. Adaptation measures in the Pacific We asked what New Zealand has been doing to help its Pacific neighbours to mitigate the effects of climate change. The Minister said that New Zealand has been involved in several projects, such as increasing the landmass of Tuvalu by filling up toxic borrow pits with sand. Sea-level rise Some of us wanted to know why a national policy statement on sea-level rise is not being considered. The Minister said that the updated coastal hazards guidance manual, scheduled to be released in late 2016, will be enough and that local authorities are engaging with the ministry on this work. The Minister for the Environment added that the Resource Legislation Amendment Bill proposes to include natural hazards as a new matter of national significance, and that a national policy statement on natural hazards would incorporate the effects of sea-level rise. Emissions Trading Scheme The ETS is the Government s main policy response to climate change. A review of the ETS began in 2015, receiving 171 public submissions. We look forward to learning about the outcome of this review. The Minister for Climate Change Issues said she would like New Zealand to be included in meaningful international discussions to develop a global set of rules and accounting measures for the ETS. In saying this, she notes that other tools will likely make a significant difference. Some of us wanted to know whether the set pricing cap of $25 for emission units may be lifted. Some research suggests that behavioural change is more likely with a higher cap of between $50 and $100. The Minister did not discount the possibility of the cap being lifted 7

8 but indicated that it was not something she was considering, and that it would not be lifted in the foreseeable future. The Minister told us that New Zealand emitters have better practices and emit less carbon than emitters in some other countries. Therefore, the Minister considers it important not to shut down domestic emitters only to then have to rely on worse polluters overseas. Some of us were interested to know whether border adjustments were being considered, which could essentially apply a tariff on targeted overseas imports such as steel. The Minister is wary of the unintended consequences of such actions (for example, the flow-on effect of increased building costs) and said that this policy is not being adopted. Some of us wanted to know whether any of the fraudulent credits New Zealand claimed from Russia and the Ukraine are going to be paid back with surplus emission credits. The Minister said that she is looking into this and has sought advice from officials. However, she indicated that it is unlikely to occur because of the ambitious 2030 target New Zealand is aiming to achieve. Including agriculture in the Emissions Trading Scheme Some of us support including agricultural emissions in the ETS. The Minister said that more work needs to be done on this, particularly to understand how these emissions would be accounted for if they were included. Some of us encourage the Minister to develop and publicly release a cost benefit analysis of including agricultural emissions in the ETS. 8

9 Appendix Committee procedure We met on 15 and 30 June 2016 to consider Vote Environment. We heard evidence from the Minister for the Environment, Hon Dr Nick Smith, the Minister for Climate Change Issues, Hon Paula Bennett, and the Ministry for the Environment. We received advice from the Office of the Auditor-General. Committee members Scott Simpson (Chairperson) Matt Doocey Sarah Dowie Paul Foster-Bell Joanne Hayes Tutehounuku Korako Ron Mark Hon David Parker Eugenie Sage James Shaw Meka Whaitiri Evidence and advice received In addition to the standard Estimates documents, we considered the following evidence and advice during this examination: Estimates briefing paper for Vote Environment, prepared by committee staff, dated 15 June Office of the Auditor-General, Briefing on Vote Environment, dated 15 June Minister for the Environment, Response to standard Estimates questionnaire, received 27 May Four Year Plan of the Ministry for the Environment, received 27 May Minister for the Environment, Response to supplementary questions 1 115, received 14 June Minister for the Environment, Response to supplementary questions , received 14 June Vote Environment (Question 112 MfE contractors 2015/16), received 14 June Vote Environment (Question 72 MfE contractors 2015/16), received 14 June Vote Environment Ministry for the Environment gift register, received 14 June Vote Environment 2016/17 powerpoint presentation, received 15 June Vote Environment 2016/17 (Climate Change) powerpoint presentation, received 15 June Response to Post-Hearing Questions , received 28 June

Report of the Local Government and Environment Committee

Report of the Local Government and Environment Committee Report of the Parliamentary Commissioner for the Environment, The state of New Zealand s environment: Commentary by the Parliamentary Commissioner for the Environment on Environment Aotearoa 2015 Report