BUDGET 2015 – KEY OUTCOMES IN THE RESOURCE MANAGEMENT, ENVIRONMENT AND CLIMATE CHANGE AREAS

The following briefly summarises some of the key outcomes from Budget 2015 in the resource management, environment and climate change areas.

Resource Management and water reform

The Government committed $41.2 million in Budget 2015 to deliver on new policy initiatives for the environment. This comprises appropriations of an additional:

  • $20.4 million over four years to provide greater national direction and support to territorial authorities in implementing the resource management reforms;

  • $16.8 million over four years to support the Government’s programme of improving the management of freshwater; and

  • $4 million to support the Environmental Protection Authority’s (EPA) role to implement the Exclusive Economic Zone (EEZ) legislation in 2015/16.

The funding to implement resource management improvements is to progress the Government’s second phase of Resource Management Act reforms, which are a key priority in 2015/16. As part of the reforms, the funding will in part support the development of a national planning template, intended to standardise and simplify resource management rules throughout the country.

The additional funding for freshwater work will enable implementation of the National Policy Statement for Freshwater Management and the 2014 National Objectives Framework. Key issues to resolve with respect to these documents include developing policy on exceptions, coastal lagoons, Māori rights and interests, and supporting a new collaborative approach to resolving managing freshwater within councils.

The EPA’s funding to implement the EEZ legislation is to support the transfer and improvement of regulations relating to the release of pollutants into the ocean environment, and develop a new Marine Protected Areas Act.

Auckland Housing

A $52.2 million capital contingency fund has been established to facilitate housing development on Crown-owned land in Auckland. It is estimated that the Crown (through various agencies) owns approximately 500 hectares of land in Auckland, which are suitable for residential development. Through this initiative, the Government will select vacant parcels of land from the relevant agency and make them available for development by a private sector partner through a competitive process.

The Government will ensure that a proportion of the new residential development is suitably priced for first home buyers. This would see these homes priced at or below $550,000 to align with the Government’s HomeStart package, which provides grants of up to $20,000 to first home buyers. The initiative is intended not just to increase the supply of Auckland housing stock, but the supply of affordable homes. Building and Housing Minister Dr Nick Smith considers the initiative will also target currently undeveloped land which already has a residential zoning, meaning houses can be brought to market faster.

Four sites comprising 30 hectares of land that are being considered for development under the new initiative were announced on 29 May 2015. The Government is aiming to have a signed development agreement for the first land parcel within six months.

The contingency fund is part of a suite of measures designed to improve housing supply and affordability in Auckland and across New Zealand. These initiatives include the Housing Accord and Special Housing Areas Act, amendments to Local Government Act over development contributions, removal of tariffs and duties on building materials, and the Government’s KiwiSaver HomeStart scheme. Dr Smith is also looking to the planned second phase of RMA reforms as the next key measure to addressing housing affordability and supply.

Transport

The new policy initiatives in Budget 2015 for Vote Transport included additional appropriations of:

  • $209.8 million to KiwiRail, with a further $190 million to be funded in Budget 2016;

  • $6.5 million over the next three years to KiwiRail, to complete signals upgrades on the Wellington Metro Rail network; and

  • $15.85m to MetService over the next four years for replacing its meteorological forecasting system.

This new capital spending will in part come from the ‘Future Investment Fund’, which was established to invest the money released by selling minority shareholdings in electricity companies and reducing the Government’s stake in Air New Zealand.

Transport Minister Simon Bridges considers the funding for KiwiRail will allow it to deliver services and maintain the national network to a safe and reliable standard. He said the Government is committed to supporting the company’s progress towards meeting operational and performance targets over the next two years. However, Mr Bridges also noted that KiwiRail must continue to drive significant efficiency and productivity improvements to reduce the ongoing level of Crown funding it requires.

The additional MetService funding will allow it to replace its meteorological forecasting system, establish a new disaster recovery backup facility and provide free weather forecasting services for the recreational aviation sector. As Mr Bridges noted, transport systems and transport users rely on accurate weather forecasts. Such services are also essential for businesses, government and the public to minimise risk to life and property from weather events.

Climate change

An additional $4.1 million of funding over four years has been provided for development of a supply management strategy for New Zealand’s Emission Trading Scheme (NZ ETS). While this includes consideration and design of an auctioning function, no decisions have been made about when or if such a system might be implemented. The funding also provides for the ongoing operation of the strategy, and auctioning if a decision is made to implement it.

The supply management strategy is intended to improve the efficiency and effectiveness of the NZ ETS. This will ensure the NZ ETS reflects the Government’s desired level of climate change response, and manage the costs and impact of the NZ ETS on the economy.

If introduced, an auctioning function would involve setting annual limits on New Zealand Units (NZUs). This would transparently act as a ceiling on the number of NZUs that could be auctioned. The supply management strategy also provides a framework within which these NZU limits could be set, and which would inform decisions about whether and when to implement auctioning.

Irrigation Acceleration Fund

Irrigation projects will receive an additional $25 million in operating funding for five years from 2016/17 through the Irrigation Acceleration Fund (IAF). The funding is intended to help to complete the investigation and development of new regional scale irrigation proposals. The Government continues to see providing farmers with reliable water supply as a priority (having allocated $35 million over 5 years to support the development of irrigation infrastructure proposals in Budget 2011), given that nearly every part of the country has suffered through drought at some stage over the past three years. Providing additional irrigation capacity is also intended to boost agricultural growth, creating jobs and exports in provincial regions.

The IAF helps support the development of irrigation infrastructure proposals to the stage where they are investment ready. This means they must be commercially robust and demonstrate a high level of community support. Around 100,000 hectares of new irrigated areas are expected from IAF-funded projects to date, with approximately 36,000 hectares of that commissioned or currently being constructed.