Speech to Lower North Island National Party Conference
Lower North Island Regional Conference
1 May 2011
Hon Dr Nick Smith
Minister for the Environment
Minister for Climate Change Issues
Can I acknowledge President Peter, Regional Chair Malcolm, Parliamentary Colleagues, Electorate Chairs, candidates, members, and friends.
2011 is a great time to be part of a John Key-led National Party. We're doing the hard yards to build a better future for our country in very trying times.
Part of that future is lifting our game in how we manage our natural resources – our land and water, our coasts and our oceans, our flora and fauna – so we might hand down to our children both a prosperous economy and a clean environment.
It's on progressing this Bluegreen agenda that I want to talk this afternoon.
First of all, I want to join others in paying tribute to your Rangitikei MP Simon Power. There have been few jobs as important this term as cleaning up the mess in our financial markets. Add to this the work in restoring some integrity to our electoral act, the shake-up in our court system, the revision of our alcohol laws and the reining in of the legal aid bill.
I know of no Minister who has achieved so much in such a short amount of time. The region can be very proud of Simon's contribution and I know we all wish him, Lisa, Sam and Harry the very best.
The most difficult politically-charged environmental issue is climate change. Across the Tasman it has triggered political causalities of first Opposition Leader Malcolm Turnbull and then Prime Minister Kevin Rudd. The dilemma for Governments is that people want big emissions reductions but balk at the cost this entails.
National has successfully pursued a pragmatic and moderate approach that is delivering real results.
First up, Budget 2009 delivered a $347 million home insulation package that has now insulated more than 90,000 homes.
Families are warmer and children healthier. It's reducing heating costs and reducing emissions. It's an initiative of which we should be immensely proud as a party and a Government.
Our second key initiative was the launch at Copenhagen of the Global Research Alliance on Agricultural Greenhouse Gases. This proudly New Zealand initiative now has 31 member countries and is led by work being done right here in Palmerston North.
The challenge is this: the global population is set to increase from 6 to 9 billion by 2050, and projections conclude that a much more affluent population, in countries like China and India, are going to want a diet that includes more meat, fruit and dairy products.
Yet over a similar time span, we need to half emissions to avoid dangerous climate change. Developing the technology to achieve this is unbelievably important.
I appreciate there are doubts among farmers to this work, but we must be aware of the experience of the American car industry. Companies like Ford and GM in the eighties and nineties ignored the need to invest in clean-tech. This short-sighted thinking left them marooned. We must not allow this to happen to our crucial dairy, beef and sheep industries.
My concern here is not necessarily the threats to market access for our products but the rising power of consumers, particularly the more wealthy ones whom offer us the greatest returns.
The reason we see a difference in perspective from the likes of Fonterra and Zespri on climate change than the likes of Federated Farmers, is that those connected with the marketplace know we cannot credibly ignore it.
The toughest decisions for Government on climate change have been on the ETS. All the advice domestically and internationally is that pricing emissions is the least costly and fairest way to reduce them.
New Zealand has been going around in circles between a carbon tax and an ETS for almost two decades. It would have been easy and expedient to have walked away.
Our decision to proceed with a moderate and pragmatic scheme has seen the costs for consumers and businesses halved, and our increased support for trade-exposed industries has protected their competitiveness.
And the scheme is working. During the 3 years preceding the introduction of the ETS, New Zealand's forest area decreased by 37,000 hectares. It was the worst period of deforestation post-war. We've seen increasing forest plantings every year since.
It is also driving a new era of investment in renewable energy. It is ironic that while Labour talked a lot about carbon neutrality during their nine years in office, 80% of the new generation built was thermal. In contrast, our reforms to the RMA, in addition to the ETS, has resulted in 830MW of new capacity made up of 100% renewables - 42% geothermal, 40% wind, and 18% hydro.
We're also taking steps in the transport sector with the $1 billion that has been committed to the electrification of Auckland Rail, the incentives for electric car technologies with the exemption from road user chargers, and the New Zealand Cycleway initiative.
New Zealand's international obligation under Kyoto is to reduce emissions to 1990 levels for the period 2008-2012.
A fortnight ago we filed our latest emissions reports with the UN showing two consecutive years of reductions and that we are comfortably going to meet our Kyoto target. If emissions had stayed pre-ETS levels, we would be facing an approximate bill of $266 million over the first Kyoto Period.
There is a rich irony in that during the Clark years in which they talked of carbon neutrality emissions grew by over 20 per cent. We should be proud of our record that we have achieved the first real emissions reductions. While some of this is due to a slower economy, two thirds of the improvement has been because of the changes in the forestry sector and the switch to afforestation.
Consistent with our policy, we have instigated a review of the ETS this year. I wish to acknowledge Geoff Thompson and his forestry expertise in this important area of work. We will need to finalise our 2011 policy after receiving this expert advice.
The underlying principle will be that New Zealand neither leads nor lags behind on climate change, but that we do our fair share. Stepping up the scheme or introducing additional sectors is unlikely until such time as we see more progress amongst our key trading partners.
In the last week, I have been in Japan, and China and Australia. All three are at various stages of developing carbon pricing to constrain these emissions.
The most interesting part of the trip was observing the enormous resources being pumped into green growth. There is a global competition underway, not indifferent to the space race and the arms race, to crack economically viable energy technologies in areas like solar panels and electric cars.
It is important we do not just view the challenge of climate change as a cost.
There are also economic opportunities. That is why the Government established the Green Growth Advisory Group in January, led by Business New Zealand CEO Phil O'Reilly.
If we look at a country like Denmark, it has led the world in wind farm technologies and created a whole new industry with more than 20,000 new jobs.
There are equivalent opportunities for New Zealand with our world leading expertise in geothermal energy. This needs to be considered in exploring the opportunities for mixed ownership of state owned enterprises.
No Minister of Finance will want to invest limited Government capital in overseas investments in clean energy but leveraging private capital through the mixed ownership proposal offers real opportunities.
The second big area of work for this Government has been reform of the Resource Management Act. Our first phase of changes completed in our first year in office involved the biggest raft of changes since the Act's inception 20 years ago.
We sought to address the nonsense of major infrastructure projects like Wellington's inner city bypass taking more than a decade to determine with a new national consenting process. Boards of Inquiry are now required in a one-step process to make decisions within nine months.
The first project through our new system, the $1 billion Tauhara II Contact Energy geothermal project, was approved well within time. We have more than $5 billion of roading, airport, and prison projects now underway, including Transmission Gully, with this new process.
Its not just big projects that have been frustratingly slow under the RMA. The last decade has seen an ever-increasing proportion of consents processed outside the statutory timeframes.
In 2008, 31% consents were late. Our reforms have put the heat back on councils to do better. Anecdotal reports are that we have non-compliance below 10% and before the election we will have hard numbers on the degree that this has improved.
Our second phase of RMA reforms is well underway. We will pass legislation in the next month for the new Environment Protection Authority.
This is about recognising we – as a country of just 4 million people – cannot justify having 78 councils redesigning the wheel. We are actively advancing a series of National Policy Statements and National Environment Standards to improve the efficiency and consistency of our environmental regulation.
A good example of how this benefits New Zealand is the standard on electromagnetic fields from cell phone sites. It costs consumers and Telco's a fortune to have different standards and experts in each council on what levels are safe.
The Phase II of our RMA reforms includes work on aquaculture, urban design, infrastructure and the Public Works Act, Heritage and water.
It is this programme of work on water on which I want to expand.
Much is said of Australia's mineral resources. Our freshwater is our equivalent competitive advantage. Unlike minerals, our freshwater won't run out if we manage it carefully.
We are grappling with three significant problems. First, the RMA works well in dealing with point source discharges like a factory, town, or dairy shed outfall but is not working for the diffuse pollution arising from intensified agriculture. Nor is the first-in, first-served system for allocating water. A third problem is that there are not the right incentives in systems to invest in water storage.
There are no easy solutions. In 2002, Labour established the "Water Programme of Action", but by 2008 it was widely regarded as the programme of inaction. Groups had become intensely polarised with Fish and Game running the 'Dirty Dairy' campaign and Federated Farmers accusing them and others of economic treason.
On becoming Government, David Carter and I initiated the Fresh Start for Fresh Water programme. Consistent with our 2006 Bluegreen Vision publication we have worked with the 58 stakeholders from Federated Farmers to Fish & Game, Fonterra, power generators, councils and iwi resulting in a comprehensive report on 53 recommendations.
It represents the most significant proposals for freshwater reforms in a generation and the final report was presented to us last month. Cabinet is giving active consideration to these currently and announcements are a matter of weeks away.
Our most urgent priority is a National Policy Statement on Freshwater Management, but there are many other components that require considerable work.
This work is a very practical application of our Bluegreen values. It is about collaboration – that's why one of our early water initiatives was doubling funding for the Landcare Trust which supports local farms and community efforts to tackle local freshwater management problems.
It is about better management by actively measuring our water takes. Only a third of water extracted is measured today. Our policies will get that up to 98% by 2016.
We are also putting out money with our mouth is. We have already increased by five-fold the Government support for freshwater clean-ups in lakes like Taupo and Rotorua and rivers like the Waikato. The Government cannot and should not be the primary funder, but if we are to make progress we need to reward councils and communities where farmers, recreationalists and iwi are making real efforts to improve water quality.
Another area where our Government has made good progress is in waste management of which our immediate priority is ensuring we protect our clean, green brand in the run up to and during the Rugby World Cup.
The expected 80,000 plus visitors will be bring additional pressures in areas like public litter, freedom camping waste, but also greater scrutiny of our 100% Pure tourism brand.
I was here a fortnight ago with Palmerston North candidate Leoni Hapeta to launch our Love NZ nationwide recycling campaign in partnership with councils and industry that will involve over 1000 new public recycling bins around Rugby World Cup 2011 venues like the Manawatu Arena, as well as popular visitor sites.
This is not just about the Rugby World Cup though. New Zealanders have made huge environment progress in the last two decades on home-based recycling. We need the same cultural change when out and about. We want to leave a lasting legacy of recycling in public places being the norm as an environmental dividend from the Cup.
Can I conclude by reinforcing the importance of our Bluegreen work.
We, more than any other country, depend on our natural environment for our economic success.
We must not surrender this policy debate to the extremes of left or right.
Only a National-led Government has the capacity to marry together practical environmental policy with long-term economic prosperity.
ENDS
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