The Productivity Commission is an independent Crown entity. It’s made up of a small team of economics and policy experts. It provides advice to the Government on improving productivity.
The ‘Low-emissions economy’ draft report was originally commissioned by the previous government. It would be surprising if there wasn’t some substantial rewriting of this report after the election of the new coalition government. Many of the Commission’s recommendations go against the previous government’s stated policy positions. The report is also scathing of New Zealand’s record on climate change.
“New Zealand’s current emission reduction response is not ‘fit-for-purpose’ for transitioning to a low-emissions economy. A number of deficiencies exist, such as:
- a lack of stability and predictability in climate change policy, reflecting the absence of political consensus about New Zealand’s transition to a low-emissions economy;
- lack of a clear plan for reducing domestic emissions and meeting existing emission reduction targets;
- inadequate central government leadership to drive the low-emissions transition; and
- poor policy coherence for supporting a low-emissions transition. New Zealand’s emissions are not yet declining; nor are current policy settings likely to lead to adequate emission reductions in the future, let alone do so in a way that achieves the greatest net benefit to New Zealand.”
What the report recommends
What if the Commission could wave a magic wand and get everything it wants? If a supportive government enacted the key recommendations, what would New Zealand look like?
A new Climate Change Act, modelled on the one in the United Kingdom, including:
- Reform of the Emissions Trading Scheme including:
- the gradual inclusion of agricultural emissions over time
- refining the scheme for forestry to make it easier and less risky for small foresters to participate
- Establishment of the new advisory Climate Commission to include:
- the requirement to publish long-term greenhouse gas (GHG) emissions-reduction targets for short and long-lived gases and the strategy to meet them
- a publicly reported system of emissions budgeting periodically setting short-term emissions
Government investment to reduce emissions
- Removal of all fossil fuel subsidies
- Increased government support for low carbon innovation
A huge expansion in forestry
- New Ministry for Primary Industries-commissioned research into converting exotic forests to native forests. This lines up with the latest discussions about the government’s Billion Trees
- A complete audit of government-controlled land suited for afforestation
- Policy options to cost-effectively establish forestry on available land
- Research to establish whether and how New Zealand can meet its emissions targets in the second half of the century when options for new forestry are likely to reduce or run out
- New investment mechanism (forest bonds) and review of the ETS to incentivise native forest restoration
Supporting smart transport
- New CO2 emissions standards for light vehicles entering the New Zealand fleet
- New subsidies for highly efficient vehicles
- Financial support from government for the network of electric vehicle charging stations
- Government procurement of low emissions vehicles
- Increased road pricing to reduce urban congestion
- Updating electricity pricing and regulation to facilitate the integration of distributed energy resources
Support for SMEs
- EECA would refocus its support for business to adopt emission-reducing techniques towards smaller firms
- The Ministry for the Environment would collect emissions-related data on waste
- Reform of the waste disposal levy to include all known, consented waste disposal facilities and differentiated rates for organic and non-organic waste
- New consenting requirements for farm dumps and other commercial waste disposal sites
SBN CEO Rachel Brown says: “We are already seeing signs that some of the measures outlined in this report will be implemented. If the key points are addressed this will be a significant course correction for New Zealand. We will move from irresponsibly kicking the can further down the road to actually addressing the reality of the situation.
“The Commission’s recommendations cannot go far enough on their own. The depth of change needed is deeper; the detail on how that change can be achieved yet to be fully understood. What is clear is that business will have to step up to fill in a lot of the gaps.
“This report also helps to highlight that we have some difficult decisions to make. The transition to a low carbon, resource efficient and restorative economy will not be a free ride or necessarily an easy one. But it is necessary and inevitable. It also represents New Zealand’s main chance to secure economic prosperity. We can do that if we play to our natural advantages and unique strength in innovation.”