Vote Environment. Transcript. Local Government and Environment Committee. 8 June 2017

Transcription

1 Transcript Vote Environment Local Government and Environment Committee 8 June 2017 Members Andrew Bayly (person) Matt Doocey (Deputy person) Joanne Hayes Tutehounuku Korako Barbara Kuriger Ron Mark Mojo Mathers Eugenie Stuart Smith Meka Dr Megan Witnesses Hon Paula, Minister for Climate Change Issues Hon Dr Nick Smith, Minister for the Environment Hon Scott Simpson, Associate Minister for the Environment Vicky Robertson, Secretary for the Environment Jo Tyndall, Climate Change Special Adviser, Ministry of Foreign Affairs and Trade Penny Nelson, Deputy Secretary, Ministry for the Environment Chris Kerr, Manager, Domestic Climate Change Policy, Ministry for Primary Industries going to talk for a little while and just give us a briefing, and then, obviously, we ll open up to questions. That ll be great. So good morning, good morning to the select committee. I d just like to introduce Vicky Robertson, chief executive, Ministry for the Environment on my left, and I ve got Penny Nelson, who heads the climate change deputy secretary within the Ministry for the Environment. I do want to acknowledge Dr Allan Freeth that s here as well, chief executive from the EPA. Other, of course, experts from the Ministry for the Environment: heading the climate section you ve got Roger Lincoln, who s the director of climate, Janine Smith, Craig Salmon, Bridget Fraser, Chris Kerr, and Jo Tyndall is back in the role of climate change ambassador. I thought the committee might be interested in that. So I ve got some good experts along today that can talk to some of the detail that members might like to get into. I thought I d try and whip through a couple of them a little more time and then others I ll just quickly move through if that s all right with the committee. 1

2 So I did want to just briefly stop on this one because I think it s important. We ve seen the latest inventory and it shows our emissions are stable. Obviously, that means we still need to do more to bend that curve, but as you can see we saw pretty steady and consistent growth up till about 2003, and then since then it s been pretty stable and even went down 0.1 percent between 2014 and Some of that around dairy product, to be fair, in that time. But we sort of get this constant that it s growing and our gross emissions grew kind of 24 percent between 1990 and 2015 and that is correct, but as you can see, we ve kind of flattened off now and hopefully the plan, of course, is to get that trajectory so that we re heading downwards as far as our emissions are concerned. Agriculture contributed to 47.9 percent of New Zealand s gross emissions and, yes, that is lower than it has been in other years. But, I think, in fairness of transparency, a lot of that is due to production, due to some of the droughts and things in those particular years, so that s, I think, where we saw it decreasing predominantly there. It s the usual kind of profile that you ve seen as far as energy, and I don t think there s anything kind of exceptional in there except perhaps in waste, which we have seen has decreased 2.1 percent in That is due, a lot, to just improved landfill management practices, which I ve got others that can speak to later, if you re interested in going into that in a bit more detail, because I think it does show where we can actually make real progress as well. I just wanted to note on that one as well that forest harvesting rates were high in It s part of the normal forestry cycle. We usually harvest at around 25 to 30 years of age, as members would know. So those trees that were planted in 1990 would be due for harvest between 2015 and So this means we can expect to see similar rates of harvesting from now through to the 2020s just because of the planting. We re building the evidence. I didn t think I d spend much on this one; most of you know it. Vivid Economics was a great start, I think, and gave us some real work to do. We ve got the Productivity Commission, which I ll talk about a little bit later, and the technical working groups that members know about, so I ll skip to the next one. Action in New Zealand so we ve started that phase-out of two for one. So that started in January and goes through to 2019 that 3-year phase-out. I think it shows that if you give them a bit of notice and they know what s coming up, then businesses will kind of react accordingly. As a result of that the number of ETS units to be surrendered over the next few years is expected to be higher. This will reduce the Crown s emissions trading scheme liability by about $59 million. So that phase-out has also contributed to an increase in the appropriation for that allocation of New Zealand units. So we re just seeing the repercussions of that and the consequences of it through that. The key issues, I suppose, are about phase 2 of the ETS review, and I ll probably talk a bit more about that because it s probably one of the most 2

3 significant pieces of work that we are currently doing, I think, that feeds into the next piece. Just briefly on that, as well, we re still contributing it and we still see technology and research as a major part of what we re doing here in New Zealand. Quite interesting in the international work that we re doing that is now led by Jo Tyndall again, but consistently from other countries we re getting the call-out for the research and technology that we re doing within agriculture. We are seen as world leaders in that area as well, and certainly other countries are concerned about their emissions profiles, because if they achieve what they want to achieve, which for most of them to reach their 2030 targets will mean more renewable energy, it will more or less mean them doing what New Zealand has already done for them to make their gains. You ve got countries like Uruguay, Ireland, Argentina, and others like that that are saying their profile will look like New Zealand s because agriculture, of course a percentage will just increase as they re able to decrease the significance of the others. So the world, I reckon, is starting it s probably a bit of an exaggeration, but there s definitely an interest from more countries in what New Zealand is doing on the AgResearch sort of front. That recent work I won t spend much time here, because we can talk about it more in questions if people are interested, but we put $4 million extra in. That was a request from officials, where they really needed, they felt, that extra work now to do the in-depth analysis of what it means to reach So it s great to have all the technical working groups out there across adaptation, forestry, agriculture, and others doing that kind of work, but unless you ve actually got the expertise within the ministry to actually be able to do the analysis of that, then it was too hard on you guys. So, ultimately, that $4 million is spent within the ministry and gives them the means to kind of do the analysis that the Productivity Commission will need as well. International progress has obviously taken a hit in the last week for President Trump saying that they will withdraw, although then saying that they might look at renegotiations, and the climate world, if you like, is sort of wondering what that means in what kind of context, and I know that ambassador Tyndall could speak to that more if the committee s interested. She s in better daily contact with other leaders than I am. COP-23 is led by Fiji, and I think that s really significant. So it actually will be held in Bonn in November, but Fiji holds the presidency. We just put $1.3 million in to help them, as a number of other countries are contributing as well. But they will be having some of the officials meetings there, and in fact I think they ve already had one quite recently. I think it will be interesting because it will put more of that spotlight on the Pacific and I know the Green Party certainly asked questions about that yesterday, and I know Labour have as well. 3

4 I think we ve got an opportunity to show the rest of the world the effects that climate change is absolutely having on some of those small Pacific Island nation States. So having the presidency with Fiji is a real opportunity, I think, to do that, because for so many of those larger countries they re not seeing the direct, perhaps, and this, I think, can really do that. So a lot of discussion with Fiji as to how they work with other Pacific countries to see how they can do that and get the benefits from it. International carbon markets is something I thought the committee might be interested in. Part of the Productivity Commission s work is definitely around how we lower emissions here in New Zealand. But equally alongside of that is: so what does the international carbon market look like? So there s not one, right. So unlike Kyoto, where there was one, where we did have questionable integrity of some of those units, the commitment from New Zealand is we would obviously only look at we make the absolute commitment of high integrity units. But there s actually not a market out there. As we all know, there s limited countries with emissions trading schemes, so there s sort of some very informal discussions at the moment as to what that might look like in the future. I know it s going to take a lot of negotiating and a lot of talking to see what that really looks like. Moving on my last slide. So the next steps are that stage 2 of the ETS, review decisions, and the Productivity Commission doing their investigation, which will be thorough and wide-reaching; that continuing of partnering with businesses and other sectors, but as you would all know, unless we ve actually got some of those settings right within forestry, within how we re going to be reaching those 2023 targets, that s what business are looking for the most, is a degree of certainty. I certainly get a reasonable amount of correspondence and concern about allocations post So for those that are trade-exposed, their allocations are up until then and then they re supposed to be coming down, and so they re looking for some degree of certainty there. And, of course, the Paris rules are still being negotiated. It s one thing to sign the agreement; now the hard work s really being done around the world on what that means to put those rules in place. Thank you very much, Minister. Now, I m sure we ve got a few questions. Thank you, Minister. The appropriation is all modelled on $25 a tonne. Are there any plans to lift the ceiling? Yes, it s part of the ETS review too, so there s a number of issues that are being looked at in that. So one is the cap of $25. I am yet to get the advice on it and for Cabinet to make that decision. Right, but you anticipate that will be within this fiscal year that we are examining the Cabinet examination? The timing of it is unknown at the moment. Officials have finished the consultation on the ETS stage 2, and the cap would be included in that. So whether or not it is made in the next 12 months, I couldn t say. 4

5 Kerr Kerr Great, thanks. Just on the agriculture technology and research, what projections are there in the 2030 pathway for the reductions that will be achieved through that technology percentage-wise? There might be someone else one of the officials might be able to answer that perhaps percentage-wise and in more detail than I can. What I would say is that we have got the rye grass at the moment that we are having to test in the US, which people see as being incredibly hopeful for reducing emissions up to 30 percent in some cases. So, I will ask does anybody know? We might need to get it for the member. Just to say that the increase in productivity, which results in reduction of emissions the intensity of production is factored into the projections. So as soon as there s a new mitigation on [Inaudible] for an inhibitor, the uncertainties are so graphic that they aren t factored in. So if those were to be able to be developed, then obviously our [Inaudible] would drop. So it s fair to say that we can t actually put a number on what the level of emissions through research and technology will drop by in agriculture at the moment? When you re dealing with future mitigation technologies, yes, the uncertainties are very high. Right, OK. So I had the scientists in, and asked them those very questions, and from their perspective they feel like it is kind of that they are on the precipice of finding something, but that could be years, even so, and then for that to get to market would be probably anywhere between 7 to 10 years. So even, you know, if they found it tomorrow kind of thing the inhibitor or the vaccine it would still take 10 years for it to get to market. Nearly half of our emissions are still 7 to 10 years off. Even if the eureka moment came it is still 7 to 10 years off commercialisation and being able to make an impact? Particularly for the vaccine and the inhibitor. Whether or not that is the same for feed and grass, which might be able to be done quicker. But, yes, realistically, you are still looking at 7 to 10 years. So in terms of the other regulatory matters that will be examined by the Productivity Commission, they will look at the ETS and other regulatory matters. What are those in mind that you have in terms of the other regulatory matters? It is entirely up to them because, you know, we just set the terms of reference for the Productivity Commission and then they are independent and go about it however they want to. So, predominantly, the terms of reference for them have been about them looking at what the kind of tradeoffs are in New Zealand and how fast we should be going and making them, what the true cost to business will be, and, I think, the opportunities, and I don t think that is looked at enough. I don t have in mind any 5

6 Simpson Nelson Nelson Nelson particular regulatory measures that they might look at. We just left that broad enough so if they feel that there is something that needs to happen or particularly needs to be done, then they can. So, in terms of the funding that s been allocated in this appropriation, how will that we spent specifically in terms of the reduction pathways? Well, I will let the officials talk about the new funding that they have got and how they might use it. Which funding are we talking about? The additional money. There s a million dollars for the domestic reductions and $924 million for the climate change ratification of domestic action. So we are due to report back in July on how that will be spent. We are currently working across the natural resource sector, so with a range of agencies including the Ministry of Business, Innovation and Employment (MBIE), Primary Industries, Treasury etc., to work through how we work together as whole-of-government on transition pathways. So it is your expectation that that will produce a carbon budget? We will be reporting back in July on how we are looking at spending that money. What I am envisaging is there is a range of reference groups going at the moment, and the Productivity Commission work that will come through in June. What the money enables us to do is put all of that together and look at what are the options to meet our 2030 target. Will that include working with MBIE and regional development agencies around transitions plans? It s too early to go into the detail of that. Good morning. Thank you, Minister. Moving to a climate change adaptation, it was my understanding that the technical working group would be producing a draft report by May. Has that draft report been received? I have got an interim report that has just landed on my desk. Can you confirm that the MFE s own website actually promised that there would be guidance for coastal councils on sea level rise last year? Uh, huh. So what is the problem? What does the delay mean? I am not sure what the actual date was that they said they would. But there will definitely as you have seen recently with the report that came through from [Inaudible] they have been out there consulting on draft recommendations. They are still consulting, and I think the next stage is really to consult some of those towns or areas that will be most affected, and the actual people themselves, because it is a big call. I do think that the way it was represented in the media the other day is very incorrect. So, actually, it is not showing at all a half a metre increase from one report to the other. The very early draft I have seen actually shows it relatively consistent. 6

7 With the IPCC projections? Yes. Is part of the technical working group or is the Government going to consider providing any financial assistance to councils to deal with the effects of climate change and to assist with adaptation, given that there has been no guidance provided since ? So is it actually moving to consider whether there will be financial assistance? Well, as I say, there are two pieces of work that are sitting there at the moment. One is within the adaptation working group of the interim report, which I haven t read and which I literally received in the last 24 hours, kind of thing, on my desk. So I haven t read that and so I am not sure what recommendations the interim report is making at the moment, but at the moment we don t have money for that, obviously, in this Budget. Nothing? No, not for the adaptation side. Is there even an option on the table of providing assistance to councils, given that the Government has provided hundreds of millions for irrigation assistance, and councils are crying out for more assistance with infrastructure and adaptation like stormwater systems. Is that even an option that the Government is considering? Not at this time. Anything that we looked at in relation to that would have to be a case that was put forward, which actually stacked up as business case for central government to be stepping in what has always traditionally been local government s area. They are going to leave it to local government? Yeah. So I am not saying that it is completely off the table, and, actually, there may be cases where there could be real exceptions and it could go through a certain pathway, and obviously I can t tell you what it will look like in 2 or 3 years after we have done this work programme. But, right now, it is the role of local government, and there are many cases where they actually haven t invested in stormwater; they have instead invested in the stuff that is above the ground that their ratepayers can see and is the kind of sexier things to do. I have got no doubt that I have got quite some concern about some of the stormwater and the quality of it that is going on under the ground, but central government is not just going to step in automatically and take over what is actually going to be a huge cost. What about for the communities like Thames and south Dunedin, where the impacts of sea-level rise there, with rising water tables, are imposing quite significant stress on communities. Is the Government open to any consideration of assistance when people may have to up sticks and move? That would have to be a the end of a process of going through the reports from the adaptation I mean, that is the type of work that the adaptation working groups are doing, so it is part of that process but it is not on the table yet. 7

8 Nelson Nelson Nelson Just a couple of supplementary questions on that, when will that interim report be made public? That still has got a process that would have to be gone through, so we do not have a set date yet. Are we talking weeks? Months? I would say within the next couple of months would be expectation. Just on the infrastructural pressure that Eugenie was referring to, the Parliamentary Commissioner for the Environment for this very reason recommended that Treasury head up a working party to look at the pressures on infrastructure and other questions around that. Is there anything that you ve considered or are going to be considering this year, for the very reasons that you ve outlined in your answer I feel like there s quite a lot of work going on. Penny actually is the co-chair of the adaptation working group, so if she would like to speak a little bit more to that since members are interested then you re welcome. Absolutely. So the initial piece of work has been looking at the impacts for the New Zealand and a stocktake of what s going on across the country. It s not until November that there s a draft report on what the recommendations are. The committee at the moment has been hearing from a range of people including the Parliamentary Commissioner for the Environment, so we ve been working with her as that group s been doing their work. So is the working group an option that could well come out of that a Treasury-led working group? At this stage the focus has been on impacts and a stocktake on what s going on throughout the country. It ll be later in the year that the group looks at what the gaps are in the issues and the recommendations that we d be wanting to make. But part of that they re looking at is those gaps as you re identifying them for some of those communities into the effects of climate change, obviously, and what the solutions might be. So one of them might be that piece of work, one of them might be going into specific areas that need a business case done as to where you would spend and how you might actually fund that. And another presentation that we had was from south Dunedin. One of the working group members is from the local authority in that area. o we ve got a range of members on it, but one area I ve been particularly worried about is in the insurance field. Because, you know, as soon as houses or businesses can t be insured, then that s obviously a huge risk and huge cost for people. So they ve been part of that adaptation working group and in some respects they re further ahead than a lot of others in respect of the work that they re doing, because they re the ones you know, if you can t insure a house, then the consequences are quite dire. 8

9 Korako Tyndall So you re saying that the insurance industry s further ahead than the Government in planning for sea-level rise. I m not sure, ahead of the Government but certainly further ahead than perhaps some of the banks and some of the other businesses as we speak to them. Shall we move to a new topic? Thank you, Mōrena, Minita. My primary question is: can you tell us about the climate change action plan you signed with China, and do you see China as a leader in the climate change space? We might bring the ambassador up to the table as well, if that s all right. There s really interesting dynamics going on at the moment, as you can imagine, and the ambassador can speak to it in more detail than I can. China are incredibly interesting at the moment in the difference that they re making within their own country. For example, when I met with the climate change Minister for China, they had literally just closed down 100 coal plants in the space of 2 or 3 months. They ve got their ETS that they re now looking at rolling out throughout the whole country, and so the dynamics of that are quite interesting. The dynamics of obviously we ve had the announcement in the last few days from President Trump, but even back in November, of course, we knew that even if they didn t pull out they just wouldn t be as forwardleaning under his presidency, and America had been leading a lot of the work programmes that had been going on subsequent to the Paris Agreement. So there s been a lot of talk amongst the EU, China, Germany, France you know, some big countries really talking about what that means and where they step in. The ambassador might like to add a little bit. So just as far as China is concerned, it is very strongly committed to taking domestic action to deal with climate change, not just for climate change reasons but also because of the pressing need to deal with air and water pollution and the health risks to the national population. So it is very, very strongly committed to action and in the wake of the US decision to withdraw from the Paris Agreement, it has been very, very quick to reconfirm its absolute commitment to the Paris Agreement and to taking that leadership role. It is working with the European Union to some extent on this and the European Union is also making very strong noises about its commitment to the Paris Agreement and its determination to take over where the US is leaving off and drive through the process to develop the rulings under the agreement. Chinese leadership in this is not the same as the US leadership. China negotiates as a developing country and therefore tends to take a different position within the formal international negotiations than the likes of the US, Europe, and the rest of the developed world on some issues. Just the post-2020 target, the plan at the moment is that 80 percent of that to be met through purchasing international units. Are you worried about the 9

10 US s withdrawal and the progress that will be made on the post-2020 rules and the creation of those markets to be able to purchase those units? I suppose, as the ambassador says, at the moment everyone s working out what that withdrawal means, how we actually fill that gap. So we haven t picked 80 percent as being a percentage of international units. I think one of the future discussions that I would suggest needs to be made, it might be how they ve done some of the assumptions to date, but it s absolutely not at a Government commitment to 80 percent being What is the Government commitment in terms of We don t have one at the moment. It s exactly the work that s going on. So you don t know how much is going to be met through domestic reductions So that s exactly the work that we re doing. Whether it s going on through the Productivity Commission or through all those working groups the plan is to lower emissions in New Zealand, and that is through a combination of obviously more renewable energy, electric vehicles, better public transport, planting more trees, in forestry you know, the efficiencies that you might see through agriculture and the research and technology that s going on there. So at the moment that s why all of that workstream is going on, because we re absolutely committed to that. International units it may make up a high percentage of them in the interim but we don t know that and my goal is to have that minimised as much as possible. I mean, I want to have more of it happening here in New Zealand. So what s your personal goal for us to be doing through domestic reductions for the post-2020 targets? I m waiting for the advice via those working groups and from the Productivity Commission to make that kind of judgment. So without the right advice I m literally sticking my finger in the air and seeing which way the wind s blowing. I think it needs more technical advice, and that s where I said I think Vivid Economics and the work that was done in that report is a really good start as well. Obviously, they re saying I mean, they re going more to 2050 but they re saying to get there you need fewer cows in New Zealand and more of that land used for planning trees. So that s one part of the argument. So while we re getting all of the advice and that technical working group s really coming up with it, as I say, I m not prepared to put numbers on it. Just in terms of when you mentioned the US s withdrawal, you talked about renegotiations to bring them in. What do you mean by that? Well, they have said well, he has said that he might look at renegotiating and renegotiating in two ways, and that s where more discussions, obviously, now need to be held. But it s whether or not he means renegotiating their contribution, their NDC, or whether or not he means renegotiating the whole Paris Agreement. Now, I think everyone s spoken 10

11 Hayes Robertson Robertson up and said there won t be any renegotiating the Paris Agreement as such. But if he want to look at renegotiating their NDC, then that might be something else. I don t know the answer to that obviously and it s not for New Zealand to be making that call. What would New Zealand s position be if the US did want to backslide on their NDC? I imagine it would depend on what kind of terms and what that looked like and the effect that it had, and I would want it to be in open discussions like you did in Paris, not a Minister sitting here making that kind of judgment call. It would affect far more than just us. Thank you, Minister, for coming along this morning. My supplementary is about it is the ETS review for the second phase. What I wanted to know, and you may have already covered it in the kōrero that you ve provided this morning, but I just want to know from that second-phase review what are some of the main issues that are popping up from that review, if you know. Officials can speak to that, and I m sure Vicky can go into it, if you would like. It won t be surprising but it is things like auctioning, which would be very new. The cap, as Dr has already raised that s certainly coming up in the submissions and what s coming. Forestry rules which I ve got to say are incredibly complicated and have consequences for pretty much everything you do, and a whole lot of kind of politics within it, as far as land use and Māori ownership and quite how all of that sort of happens. International units and their usage, which has already come up. Allocations, as I said, is quite a big one if you are a trade-exposed business that s looking years out. I had one big company say to me that they had invested more than $350 million into a new plant, and they had already done that, which was obviously a lot cleaner and everything else. They said, to make another, what is the next stage, to make that sort of an investment again they need a degree of certainty from us. I would say us in the general, to be quite fair as well that that s not just the National Government. There are definitely some areas of this that, I think, for us to lower emissions needs a degree of certainty from Parliament, to be fair. Just in that ETS review, is there any consideration of differentiated gases, in terms of looking at the differentiation between short- and long-run gases and how we account for that domestically? We were talking about the other day, actually, and just whether some of the discussions that have been going on around it. That s probably more international. No, I m talking about domestic ETS how we do it, how we account for it, within our own domestic ETS. So, it s not part of the current year but it definitely is something that we need to have a look at. OK, but it s not part of the current review. Not the one that we ve just consulted on. 11

12 Doocey Tyndall OK, last question, members, because I think we ve got other Ministers waiting. Thank you, Deputy Prime Minister. You ve given us a bit of your assessment of President Trump withdrawing the US from the Paris Agreement. Looking at the Paris Agreement now, how do you see it, in its strength going forward, if that was to happen? One thing that s quite interesting, that the ambassador was talking me through the other day, is the length of time it will take him to actually withdraw. So, correct me if I am wrong, but that s through to 2019 before he can then officially file his papers to say that they are withdrawing, and then it won t be until 2020 that they actually then withdraw from the agreement. So that s a bit of water to go under the bridge, and quite a bit of negotiation and discussion as to what that looks like and in what sort of context, but I might let the ambassador speak directly to your question. So I think that the initial reaction has been one of solidifying or solidarity on the part of every other country that has already ratified the Paris Agreement or is going through a domestic process to conclude their ratification so very, very strong and consistent expressions of commitment, a reaffirmation of commitment, to the Paris Agreement. There s absolutely no sign or signal of any other country suggesting that it might follow the US lead. Just whether it will make the negotiations on the Paris rule book easier, that s debatable. It will make things, I think, unquestionably, a little bit harder, but there is still a very strong commitment and determination to conclude the work that we have been asked to conclude by November 2018, to have those rules in place. So it s business as usual to a very large extent within the UN climate change negotiations. I mean, they ve just got some absolutely incredible experts in that area, and it would be interesting, and you would have met them in Paris, and it would be interesting to see how involved they remain in just the rule book. But even if they do remain they will not have the same mandate, of course, even in some respects the same mana, to be sort of ruling and running a whole lot of these programmes. Hence why the EU and others are really interested as to how we kind of fill that gap, if you like. I think, in some respects, it s obviously incredibly disappointing, and I disagree with completely with Trump pulling out. It makes a difference to it being a worldwide agreement, a global agreement like we ve got, and it affects that. But, equally, it s that day-to-day losing some of that real expertise that the US did bring to the table. Thank you very much, Minister. I would just like to acknowledge Vicky, Penny, and, of course, the ambassador. A very good briefing, and thank you very much. I ll leave Vicky here, and she can do the next one too. 12

13 I would like to call up the Hon Nick Smith and the Hon Scott Simpson. Welcome. N. Smith Thank you, Mr man. Obviously you ve been introduced to both Vicky, as the chief executive of the Ministry for the Environment, and her team, and also Dr Allan Freeth, the chair of the EPA, who has responsibility for those regulatory functions. I hope this morning you re going to be really tough on your former chairman, Scott Simpson. Scott has taken up responsibility for both the Community Environment Fund and also the policy areas of waste. Just to go quickly through the estimates, the estimates are dominated by the large numbers associated with the emissions trading scheme, which is obviously Paula s responsibility. The big increase that you see in those estimates is a consequence of the carbon price lifting, but also the phase-out of the two-for-one, and my responsibilities are principally around the ministry vote of the smaller sums. In terms of the key priorities for the ministry, over the estimates period of 2017 and 2018, climate change obviously rests with Paula, but from my perspective, for the ministry, it is the work programme on fresh water, the Resource Management Act, and particularly the implementation of the significant reform bill passed by Parliament in April. There is substantive policy work in the area of oceans, which is being very cooperatively worked with both the Department of Conservation and the Ministry for Primary Industries, from a fisheries perspective. There are issues of waste that rest with the Associate Minister. In the area of climate change, Paula is taking the lead on the issues of mitigation, of which there was substantive questions previously, with the issue of the hydrofluorocarbons being part of the Montreal Protocol, then I am the lead Minister in terms of that piece of work. Obviously, the ministry has responsibilities around biodiversity in respect of the on private land and particularly as it relates to the NPS. In terms of the freshwater quality work, the large undertaking for the ministry s policy team at the moment is around the clean-water package that the Government released in February. Key components of that are the amendments to the national policy statement, the detail of the stock exclusion regulations, and the ongoing work programme around pricing and allocation of fresh water. A further piece of work I want to draw the committee s attention to is the NPS as it stands alone is only as good as its implementation by our 16 regional councils. Consistent with that policy, we have had a review both by the ministry and by the Land and Water Forum, and that piece of work is due for early conclusion. You would also note the freshwater report, under the Environmental Reporting Act, being released earlier this year. In respect of freshwater funding, our Government has commitments of $350 million in the pipeline. Last year s Budget provided for $100 million over 10 years to support regional councils and communities in their efforts 13

14 to clean up our water bodies. The panel is currently considering those bids for the first round of that $100 million allocation. In respect of the Resource Management Act, the programme of work is not just the support the ministry is giving to the local authority sector around its implementation but there is a power of, in my view, very good quality work being done by the ministry in making far greater use of both national policy statements and national environment standards to get better both economic and environmental performance. Recently we concluded the national environment standard on telecommunications, on urban development, on the pest control regulations, and in the pipeline are national environment standards on plantation forestry, which we hope to conclude prior to the general election, contaminants in soils, on aquaculture, and then, the work programme for , in respect of dam safety. In respect of waste litter and contaminated sites, the work on microbeads that I announced at the beginning of the year is to be concluded by Scott. We have completed successfully the clean-up of the Alexander and Prohibition mines, of which I was quite shocked to be advised by the US lab that the highest levels of arsenic that they had found in any testing in the world was on that site, and that project is now concluding. In October last year we introduced the ban on asbestos-containing products. The next piece of work is the waste disposal levy review that is required under the Waste Minimisation Act, being led by Scott. At the conclusion of the work on microbeads, the ministry is doing an update on the priority list for those contaminated sites. The two particular projects, of which I m wanting the ministry to make substantive progress on, with the relevant regional councils, is the clean-up of the Kopeopeō Canal in the Bay of Plenty and the Calwell Slip in my own constituency. In terms of data and evidence work, you will have recalled this last year the conclusion of the environment and conservation science road map. The concern there was both the ministry, the Department of Conservation, and MBIE have all sort of had their bits of work going on around science and technology, and collective Ministers, with the ministry, have wanted to get a single science strategy around our priorities, and to have that better coordinated. You will have seen the marine environment reporting Act report out last October, the freshwater one out this autumn, and in October the report on atmosphere and climate change, and in April next year will be the fourth report under that new environment legislation. In respect of the marine area, the committee would note the decommissioning requirements on oil platforms in the Resource Legislation Amendment Bill. There are important regulations that the ministry needs to conclude with MBIE, in that area. There s been the new regulation around the new activity of Rocket Lab, and obviously the committee will be familiar with the Kermadec Ocean Sanctuary Bill that has been introduced, but there are outstanding issues there to resolve, to conclude that. 14

15 So, in summary, the priorities, in order of importance, for the ministry, over the period of the estimates is climate change, fresh water, biodiversity, oceans, resource management, and waste. I welcome the committee s questions. Good morning Ministers. Biodiversity. That wasn t on the list of NPSs that you had there. There was a proposed one put out in 2010, a lot of submissions, there was a substantial analysis of submissions. I think 45 percent of submitters, largely rural land owners, didn t like it. Has National just given up on having any national direction around biodiversity protection despite what the parliamentary commissioner had to say in her recent report? N. Smith Quite the opposite. So why has there been no progress for all that time? N. Smith Well let me tell you exactly the progress, cos I m hugely encouraged by what we re up to. Actually, the process was not The draft NPS was put up by the previous Government, back in 2002, and they were not able to progress it. And the real tension that you have, going on in many councils and at a national level is the tensions between the public good of biodiversity protection on private land, and the issues of private property rights, and what is that right balance. Now, at the moment what occurs is there s little guidance at a national level, and there is a whole lot of little scraps going on around New Zealand as to where that balance is. It is our Government s policy that many of these issues are best resolved through a collaborative process. That has enabled us to make far greater progress on fresh water for the first 18 years of the RMA, no national policy statement in that area. That has been delivered as a consequence of the Land and Water Forum. I have recently provided funding for the equivalent of the Land and Water Forum, for a biodiversity collaborative process, involving Forest and Bird, involving the Environmental Defence Society, involving Federated Farmers they have come together, I met with them last week. With respect Minister you gave us that answer last year, so why has it taken N. Smith No, I couldn t have given you that answer last year because the agreement was only reached between Federated Farmers, Forest and Bird, EDS Well, when you announced it at the EDS conference you talked about a collaborative process. N. Smith I did. And what has happened since is the establishment of the trust in exactly the same way as the Land and Water Forum. The collaborative group has begun their process. I have scheduled, on that process, a time line. In my view the reason that previous attempts of establishing a national policy statement on biodiversity has failed is because of the gulf between the sort of land owner interests and the conservation interests. For the first time I detect a real willingness from those groups to engage and to provide that direction, and I have confidence in the process that the Government has finished. 15

16 When can we expect one given that it wasn t on your list of priorities? N. Smith The reason it has come back on to my list is because of the willingness of the It wasn t up there. N. Smith Well, actually if you look at the No, but the NPS, you had a list of NPSs that were going to be finalised. Biodiversity was not one of those. When N. Smith Yes, let me be clear nor was there on that list. There is actually a published list on the ministry s website of the full set of national direction. Also on that list is the issue of a national policy statement around natural hazards. I do not expect to conclude either an NPS on natural hazards or on biodiversity in the next 12 months the period of this estimates. That is why it is not on that list. My expectation and my experience with the Land and Water Forum is that if you are to build that consensus, it is more likely to be, in terms of actually having an NPS on biodiversity, I would expect that collaborative process, Eugenie, to take about a year. And one final question on this, will it include aquatic environments because the draft that went out in 2011 didn t, and 74 percent of our native fish are threatened. So will it apply to aquatic biodiversity or is it continuing to be restricted to terrestrial? N. Smith It is restricted to terrestrial for a very good reason, and that is the substantive issues we have within the RMA and the implementation by council is in management of the biodiversity on private land, in exactly the same way as there s hugely important biodiversity issues on the conservation estate, and that is not covered by the NPS either. In respect of the marine biodiversity, the primary piece of work my ministry is doing in that area is in respect of marine protected area reform, which is a priority. When will we see a bill? N. Smith We will see further progress prior to the election. Meka, new subject I think is it? No, no, water. Thank you Minister, and sorry I had to pop out. My question is around the Iwi Leaders Group and their ongoing work, I understand, with yourself and previous Ministers for the Environment particularly around water quality, but more my question is geared at an update on where they ve got to with you or your officials on water allocation. N. Smith The Government announced in collaboration with the Iwi Leaders Group, freshwater group, the technical advisory group on the issue of allocation and pricing. There is a broad consensus, including from the Land and Water Forum players, that the current first in, first served approach of the RMA around freshwater allocation is suboptimal, but it s a heck of a lot more difficult to get a consensus around what would replace first in, first served. You may notice, very interestingly, the major water reforms that are occurring currently in the UK and in other jurisdictions around the 16

17 issue. These issues are complex and that is why the Government has that technical group being chaired by the Hon. David Caygill to provide further advice. The iwi leaders have expressed confidence in that process and have had input both to its terms of reference and its membership. So, just supplementary to that, Minister, prior to coming in here, I was one of those technical advisers on that water group, so I m going back So I m listening, and thank you for your response. What you ve given is what was talked about about 8, 9 years ago, so I m clearly looking for progress on the issues that you raised. Aware that grandparenting around water rights, over-allocation isn t ideal and is suboptimum, those are the very issues, if you track back to that period of time when the iwi leaders first gathered here in Wellington, all I m trying to get is what real progress has been made in this space. N. Smith Good question. Let me give you three areas of very real progress. Firstly, you can t manage what you don t measure. When we came into Government in 2008, only 20 percent of water takes nationwide were being measured. That figure is now 94 percent. That s huge progress. Step No. 2: if you take it in turns of limits on water takes from national water bodies, when we came into Government, only 20 percent of catchments in New Zealand had limits on the amount of water that can be taken. The latest advice I ve had on that is that we re currently at 75 percent of water bodies have limits on takes. In respect of water quality, when we came into Government, a crucial issue for New Zealand was nitrates in our water systems. There were no catchments in New Zealand in 2008 that had limits on the amount of nitrate pollution. The latest advice I ve received from the ministry is that 21 percent of New Zealand water bodies now have limits on nitrates. I think all those three show substantive progress. Minister, the Freshwater Improvement Fund $100 million announced, I think, before the election in Why has it taken nearly 3 years for the first funding applications to be available, given that, as understand it, it s only $10 million a year $100 million over 10 years. Why has there been that delay? N. Smith Yeah, well, the first thing is the $100 million, of course, is on top of the $450 million 1 that was provided in the 2010 and whenever you set up such appropriations, it takes time for bids to be considered, to be independently reviewed by a panel, and there are quite strict rules in respect of the way the ministry must conduct those bidding processes. The $100 million was provided in the Budget of There is bids for about $160 million-odd, and the number of bids, if I recollect, is about 70, and I expect to be in a position to be able to announce those in coming months. Korako Kia ora. Mōrena, Minister. I ve got a question. I think it possibly is for the Associate Minister of waste N. Smith Good make it really tough! 1 This figure was subsequently corrected to $350 million by the witness 17

18 Simpson Korako Korako Simpson S. Smith Whitebait. Simpson Simpson Simpson Associate Minister of waste? Well, responsible for waste. What support has been given Very important Minister of Waste. Very, very important the former chair of the Local Government and Environment Committee. So here is the question: what support is being given to the recycling of plastic bottles? Well, it s an area that I m learning a lot about very quickly, and this Waste Minimisation Fund is a remarkable piece of circular economy, where people who pay money to put things into landfill some of that money goes to the operators of the landfill, usually the territorial authority, and the balance of that money goes into the Waste Minimisation Fund, which over the last, what 10 years or so, has gathered together a pool of funding, a pool of about $60 million. So some significant projects can now be funded. One that I am really excited about that is in the final stages of coming to fruition and not yet ready to be finally switched on, but I think is very exciting, has to do with these things and what we do with them. Most people will know that in our kerbside recycling, we tend to put them in a wheelie bin, or something like that. That gets sorted and then at the moment it gets squashed and then put into bales and, at the moment, sent overseas for recycling. Whilst at the same time manufacturers in New Zealand using the same materials are using virgin, imported product to make these sorts of things, which are food containers and that sort of stuff. This material and this material same material. And so the Waste Minimisation Fund is looking at exploring an opportunity to turn these into this, which is a No, it s not whitebait, but it is clean, chipped, and PET material that is able to be then taken from this and then fed into a system like this, and produce this product. So we have two or three really net benefit impacts. One is that we re not using so much virgin material, and the second thing is that we re getting rid of a whole lot of this stuff from our landfill. So I think that s a very exciting opportunity and a really good example of what the Waste Minimisation Fund is able to do. So the Waste Minimisation Act what other products do you plan to bring in within this financial year as priority products, and will tyres be one of them? Look, there is some work being done on end-of-life tyres and, actually Will they come in as a priority product? The delegation that I ve been given, specifically excludes end-of-life tyres, so I m going to let the Minister have a little chat about those. N. Smith The reason for excluding the delegation on waste of tyres is that I have had a piece of work under way where not just an issue with respect of the Waste Minimisation Act, but actually the national environmental regulations under 18