The Government's Environmental Reform Agenda

An address to the Environmental Defence Society annual conference

 Auckland, 1 August 2018

Tēnā koutou katoa.

The Environmental Defence Society (EDS) has an incredible work programme. Can I thank EDS and its funders, who keep going with really high quality policy work. I find that useful both in a technical sense and a political sense as we all try to drive forward on these environmental issues.

It is a pleasure to be back at the EDS conference. It’s great to see so many familiar faces. I know a good proportion of the room actually, having met many of you often over the years. It is particularly pleasing to be back here with a bit more power to actually make some of the changes that I so believe in.

Economic growth within environmental limits

I am Minister for both the Environment and Economic Development, as well as some other portfolios including trade. I am really pleased to be part of a Government that I know is committed to protecting the environment and taking action on climate change in particular, as we also aim to become a more prosperous and fairer society.

Your Government is clear that economic growth should be within environmental limits. Many of you would have heard me say before that I love the quote of former World Bank economist Herman Daly – ‘The economy is a wholly owned subsidiary of the environment, not the reverse’. People may get sick of me saying that, but I am going to continue to say it, until in many years to come I give up on politics, because I think it describes a simple truth.

This is not pure idealism, but there is some idealism in there. The environment should be protected for reasons of idealism, not just for economic reasons; but it is also true that protecting the environment does safeguard our economy.

Nowhere in the world is that clearer than in New Zealand. Our two biggest industries, agriculture and tourism, are built on natural capital. They both rely on natural capital for their very existence – we wouldn’t have those industries otherwise – and they both extract higher value than average because of the quality of our environment. So they need our environmental reputation to obtain higher prices for the goods and services that they produce.

That view is shared across government: Labour holds that view, our coalition partner New Zealand First holds that view, as does our confidence and supply partner, the Greens.

At a personal level, I have never accepted that we have to choose between economic growth and a clean environment. I have always believed that we can have both. I see it as a fundamental part of my role in this Government to integrate better environmental outcomes with a stronger economy and a fairer society. I really believe that we can do that and I have strong views as to how we achieve it.

It happens at a number of levels. At the highest Budget level it happens by changing Budget priorities, and we are doing that through trying to look at our Budget priorities through a living standards framework, which addresses all four capitals. It brings natural capital to the fore as well as social, human and financial capital. That work of course is led by Grant Robertson, our Minister of Finance.

Jacinda Ardern, your Prime Minister, pushed climate change up the political agenda during the last election by calling it her generation’s nuclear free moment. At a portfolio level, I push environmental issues every day in every role that I hold.

I had the privilege of launching Catherine Knight’s recent book Beyond Manapouri: 50 years of environmental politics in New Zealand. In it she describes the history of New Zealand environmental regulation and environmental activism at a civil society level, and one of the things she notes is an early recommendation from the OECD.

Now the OECD provides fantastic advice to New Zealand across a range of environmental, social and economic issues, but they do not always get it right. At the time when the Ministry for the Environment was being formed, the OECD recommended that the holders of environmental portfolios not have economic portfolios. I think that was a mistake, and one we made in New Zealand.

We actually thought that the power of the Ministry for the Environment alone would be enough to get to good environmental outcomes, and that we would pollute the idealism of the Ministry if we had economic ministries tied up with it. I think we got that wrong as a country. I think it is only since we have started to integrate those who hold environmental portfolios with other levers in government that we are going to be able to overcome our challenges.

I had that lesson taught to me when last in government, where Helen Clark tied the Climate Change and Energy portfolios. We made some real progress at that time, including introducing an emissions pricing regime, which would have been impossible to achieve if climate change had been left without economic levers related to energy.

Trade

In terms of my trade portfolio responsibilities, it is unfair to ask trade agreements to do what international environmental agreements cannot achieve. I do tire at times of the critics of trade agreements who say that they shouldn’t cede regulatory sovereignty, but that they should take regulatory sovereignty by requiring ever more enforcement mechanisms to be imposed upon other countries, so that we can seek better environmental outcomes.

While it is unfair to expect trade agreements to do what the world doesn’t seem to be able to agree in its environmental agreements – which is to have enforceability mechanisms built into those agreements ­– nonetheless in trade your Government, and I carry this responsibility, is out there fighting for the right balance.

We always protect the sovereignty of New Zealand to do whatever is necessary environmentally –whether it is through price-based measures, regulations or taxes – so we never cede that sovereignty. But we also try to include enforcement mechanisms to stop things like subsidies of illegal or unreported fishing on the high seas. We do that. We expect other countries to cede their sovereignty on issues like that. We push hard. We do not get everything we want but we actually do make progress.

Some of the progress is very slow. The New Zealand trade official who took the first resolution to the World Trade Organisation (WTO) to ban subsidies by countries of illegal or unreported fishing was Vangelis Vitalis – it was his first job at the WTO for the Ministry of Foreign Affairs and Trade. He is now our most senior trade official and we still haven’t achieved it, but we are getting ever closer. You can take pride that it was New Zealand that started this 20 years ago, and it actually may be just about the only thing that the WTO agrees on this year. It is getting close to being agreed.

But we already have that provision in the recent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), where the countries which are party to that agreement are agreeing they will stamp out subsidies for illegal fishing, which sadly are still prevalent in many parts of the world.

We are good at free trade agreements (FTAs) in New Zealand, I think we get that balance about right, but I would note that you shouldn’t blame FTAs for the inability of countries to agree enforceability mechanisms in their environmental agreements.

Economic development

In my economic development role, I push environmental outcomes all the time.

Whether it is through government procurement, of for example consumables that can be recycled, reused or composted.

Whether it is through fuel efficiency standards in the vehicle fleet, which government procurement also touches.

Whether it is through research and development policy, where we are trying to get investment in the parts of the economy that will move the economy from volume to value in a way that has a better environmental effect than our current economy does.

Or whether it is through how we use the Provincial Growth Fund (PGF), an initiative New Zealand First brought to the table.

One of the PGF’s roles is to stimulate more forestry investment in our billion trees programme. We are looking at how we can do that in a way that best causes the right tree to be planted in the right place and whether, in addition to a decent price on carbon, we have some subsidies to ensure we get some more native trees in the mix.

In research and development policy and economic development policy, I am also really pushing to get more than our fair share of technological business opportunities that arise from sensor technology and robotics, combined with positioning systems and computing power. This is making possible new areas of endeavour that technologically weren’t possible even a few years ago. We are doing that in part because we want to find a route through to better land use practices, which are in the end the key to water quality improvements in areas that are farmed.

Your Government really does believe that the economy is a wholly owned subsidiary of the environment, and so we are pushing to do what we were elected with a mandate to do.

Conservation

Two years ago when I was at the EDS conference with Andrew Little, the promise we made was that we would restore the advocacy function of the Department of Conservation (DOC). We have.

The Greens are in charge of that portfolio area and Minister Eugenie Sage is doing a great job, and there is $182 million of additional core funding over four years. She has already unleashed DOC with a freedom to advocate and stick up for the environment as it was already meant to do. There is a lot else that needs to be done with the additional funding, primarily in relation to predator control, but also improving DOC’s institutional capacity.   

Climate change

On climate change, it is hard to believe it is only nine months since the Government was formed given what’s already happening. In our first 100 days, and I congratulate Climate Minister James Shaw on this, we established the interim climate change committee, and we are in consultation on the Zero Carbon Bill. We have reignited a national conversation on climate change, which I think dwindled over the last nine years.

It is good to see it up there again and pleasing to see business and farming leaders stepping up to the mark. We should congratulate them for doing that. The recent formation of the Climate Leaders Coalition – some 60 businesses pledging to reduce emissions and play a leadership role – really helps. I’m personally quite confident that we are already substantially on the path to a transition to a post fossil fuel economy. A low emissions economy is a very positive development for New Zealand and the world.

I think the leadership coming out of some of the farm peak bodies is really good and to be applauded. Some individuals are really stepping up and leading. It is a hard space because a lot of them are elected, and not all of their members are as progressive in their thinking as they are. We need to celebrate these leaders and work alongside them and gain their help as we seek to achieve net zero carbon emissions from our economy.

The 2017 OECD report into New Zealand’s environmental management system nonetheless showed we have a number of big issues to tackle. The OECD does an in-depth report once a decade and last year it made about 50 recommendations relating to climate, water, urban development and the resource management system. These recommendations include use of more economic instruments, which I personally believe in, and new institutional settings and more national direction, which I also agree we need. As a Government we are taking action in each of these areas.

Freshwater

Freshwater, as many of you will know, is my priority as Minister for the Environment. I’m happy to be judged at the end of my time in politics as to whether I’ve made progress or not, and if I haven’t you should judge me as a failure. Politicians don’t say things like that about everything, because we can’t achieve progress across all things. We have to prioritise some things, but when we do prioritise things we do cause the ministries and civil society to take note, and that in turn helps achieve the outcome that we want. Making those sorts of statements is also a signal to the system that we are serious about fixing this.

I also take heart from the fact that Agriculture Minister Damien O’Connor also feels very strongly about these issues. Some of you will know he is a former river rafting guide. I flatted with him for many years, and I know that his heart is in exactly the same space. It is pleasing that some of his Budget bids, which were backed by the Greens, went to sustainable farming initiatives so that we can help the agricultural sector improve their land use practices.

I was very pleased that water quality and pricing were top issues throughout the 2017 election. At last year’s EDS conference, I was in the middle of that with a lot of the people here, trying to raise up water issues as an election issue. I was very pleased that water stayed at the top of the agenda from the start of the election to the end. One of the reasons for the controversy around water was the discussions we had not just about water quality but also about pricing – which I still believe in.

But you’ll be aware that, as part of our coalition agreement, we agreed that outside of water bottling we are not introducing a price on water during this three year term. In that negotiation, we chose to prioritise greenhouse gas emission pricing over water pricing. I believe, given that a trade-off needed to be made, we made the right trade-off. So we are not progressing water pricing beyond bottled water during this three years.

Nonetheless, it is really interesting that it has been many, many years since an environmental issue had so much profile during an election from start to finish, and I think that is a wonderful thing for environmental policy generally.

By the end of the election, every senior party representative on environmental issues ­– from National, Labour, New Zealand First, the Greens, The Opportunities Party (TOP), the Māori Party – everyone accepted the proposition that in some catchments we’ve gone too far with intensive agriculture, and that we have to reduce nutrient pollution in those catchments. We should just bank that. That is agreed. There is no debate about that now. We should not allow that debate to be re-opened.

We have an election mandate and now carry a duty to implement what is necessary to improve the quality of our rivers. I am willing to work with anyone who is willing to share in that duty, and I again applaud the emerging leadership that is coming from some parts of the primary sector.

I know that campaigners in this room who have been fighting these issues for decades will always want us to move faster and we appreciate that pressure, but I do believe that we are seeing a real change in the primary sector and a drive to make the improvements required.

And it is not without hope. Just yesterday I was reading a report that modelled the decrease in nutrient loss to waterways by changing the way in which centre pivots are used in Canterbury, by not filling the soils to over 100 per cent of their water absorbing capacity but taking it to 90 per cent, and also being a bit more careful in the shoulders of the dairy season. Without any material impact on pasture growth (I think 4 per cent) there was an average modelled decrease of loss of nutrient to rivers and aquifers of 27 per cent. This can be done and it needs to be done, because in Canterbury we still have increasing nitrates in some of the aquifers. We need to do better.

The Government has a series of initiatives coming along. We are going to revise the National Policy Statement for Freshwater Management. We have some great feedback from the Land and Water Forum (LAWF), regional councils, NGOs including EDS, Fish & Game, Forest & Bird and various Māori groups we are meeting with, who are all contributing to our agenda for freshwater.

Some issues can’t be agreed by collaboration and the latest report from the Land and Water Forum proves that. They could not in the end after all those years of good work, very good work, reach agreement as to how to allocate nutrient in nutrient-rich catchments where there are more people wanting to apply nutrient than the environment can sustain. How do you achieve fairness between existing capital investment and those who have got undeveloped land? It now falls back to the Government to resolve those issues and we will, and it is likely to be via a National Environmental Standard.

It is through small streams that most of the livestock effluent and nutrient run-off actually gets into waterways. And in respect of a good suggestion from LAWF recently, let’s focus on the at-risk catchments and ask the regional councils to do so. We can’t do everything at once, although we need national standards that eventually apply everywhere.  

I’ve always hated the idea that we should be classifying rivers into those that are wild and outstanding, and others. I’ve always seen that as an excuse to classify the best rivers that rise in national parks as outstanding, and allow the smaller ones to be used as drains. I’ve always had the view that the most important river to me, and I think to most people, is the one that people live closest to and use. We are not going to pursue the outstanding river classification group; we are actually going to try and protect all rivers. Because I think every local river should be clean enough to swim in and sustain aquatic life.

Urban issues

Our urban areas obviously face challenges. It’s good to see Auckland stepping up by bringing forward close to a billion dollars of expenditure to separate sewage from stormwater, which is the main problem there. On urban development you are going to hear from Minister Phil Twyford. But suffice to say one of the things we have to do is protect our versatile land and high class soils, and we will do that through a National Policy Statement.

Biodiversity

Associate Environment Minister Nanaia Mahuta has responsibility for the proposed National Policy Statement on Indigenous Biodiversity, and she is kicking that along. I think that it is really good we have a Māori minister bringing forward that work. 

Natural hazards

On natural hazards, the Climate Change Adaptation Technical Working Group released another report in May. You’ll also be aware that we are dealing with some challenges on new contaminants including PFAS, which is being released into the environment mainly from firefighting foam.

Resource Management Act

On the Resource Management Act (RMA), we have already put out some draft national planning standards, which you will be aware of, that are trying to standardise plan formats.

 I deliberately took off the agenda early progress on wider RMA reform because we just didn’t have the capacity to do everything. I also thought there were learnings to be had from what we are doing on urban development and freshwater. These will make better informed the RMA work that we need to do.

We will have a short-term remedial RMA bill this year, and next year we’ll crack into a more holistic look at the RMA. We thank EDS and others for their work on that.

I will just end by saying that I think we need to be very careful that we don’t unleash a beast by re-opening Part 2 of the RMA unnecessarily.

With that, if we’ve got any time I’m happy to take questions.