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Parker: NZ Council for Sustainable Development

Hon David Parker
Minister responsible for Climate Change issues

3 August 2006


NZ Business Council for Sustainable Development

Good afternoon. Thank you for coming to this session on climate change.

The New Zealand Business Council for Sustainable Development is a leader in business circles and recognises how our economy and the environment and social development are linked.

Most organisations, be they business organisations or NGOs, recognise that climate change is a critical issue of our time, and some have actively engaged with me on ways that government and business and others in our community can work together to deal with it.

I’m not here today to preach - I know that you know that we’re grappling with an issue that isn’t amenable to a quick fix, and that requires not just a concerted effort, but important changes in the way we live and work.

Today I want to outline the government’s thinking how we’ll have to work together to tackle climate change.

Conditions that NZ will have to adapt to

It’s clear that for policy purposes we have now moved beyond a debate about whether climate change is occurring, to what must be done.

We know that the future will see changes to average temperatures and rainfall, sea levels will rise and we will have to contend with more frequent and more extreme weather events such as floods, droughts and storms.

Events like these could be devastating to our economy, as we know from experience - the floods in February 2004 are estimated to have cost well over 300 million dollars with some farmers still recovering.
The cost of the 97/98 drought is estimated to be one billion dollars, and is thought by Treasury to have triggered the economic recession in the late 90s.
So we have to bear in mind the potential costs of a changing climate when making policy decisions.

However – no matter what we do - at least some of these events will come to pass because of the greenhouse gases that have already been emitted or inevitably will be.

As a biologically based economy, New Zealand is particularly vulnerable to an unstable climate. So we must act, if we are to maintain our competitive advantage and protect our agricultural base.

Some of the future costs of climate change can be avoided or reduced by sensible planning now to protect things like roads, sewerage systems, electricity transmission, water reticulation, and telecommunications. These assets have useful lives measured in decades not years. Many costs can be avoided or reduced by taking sensible steps when this infrastructure is routinely replaced or upgraded. Relevant government agencies will be working to achieve this.

Climate change also has the potential to affect NZ through events that flow on to us from elsewhere in the world.

For example, more frequent and severe cyclones and coastal inundation in Pacific Islands will impact on New Zealand's responsibilities for aid and disaster recovery, and increase immigration pressure.

Ecologically, whole systems are threatened. Already large parts of the Australian Great Barrier Reef are dying as sea temperatures and acidity change.
Hurricane Katrina in the US has shown that a single large climate event can affect global oil prices, and petrol prices in NZ.

Global insurance companies such as Swiss Re and IAG are consistently warning about the implications of climate change for insurance cover.
Losses due to weather-related events have been rising much faster than losses due to other natural causes such as earthquakes. Rising re-insurance costs will affect NZ insurers, and availability of insurance for ordinary Kiwis no matter what happens in NZ itself.

It's fair to note that it's not necessarily all doom and gloom. Some of the more immediate flow-on effects of climate change could be positive for New Zealand, or at least have positive aspects. For example, more droughts in Australia could give New Zealand’s agricultural exports a competitive advantage. Similarly, the winter tourism season is likely to make Australian ski-fields less economic much earlier than New Zealand ski-fields, leading to an increased influx of Australian winter tourists.

It will depend on the ingenuity and foresight of our business community whether we will be able to make the best use of the opportunities if and when they occur.

But in the meantime, the work government is doing on adaptation will allow us to reduce risks and increase opportunities arising from the unavoidable effects of climate change.

Building a consensus

Climate change is an amorphous, and esoteric issue. It seems complex to many. New Zealanders tend to identify it as an environmental concern second on the list to pollution. In the absence of an understanding of what to do, many wring their hands, and move on. We want to build a consensus.
Suggestions have been made that we can just tell people what to do or wait for some miracle technological cure. But we need a far more comprehensive and sophisticated approach – an approach that changes behaviour. An approach that:

- Starts from where people are, not where we want them to be
- Emphasises practical steps which make common sense for other reasons people identify with. (People don't argue against insulating houses, planting forestry in areas subject to soil erosion, and protecting our infrastructure.)
- Uses social and economic mechanisms that have the greatest effect on behaviour that has to change e.g. social status, costs and incentives

- Frames climate-friendly behaviour as a set of automatic preferences that are a normal part of the way we operate – not just an environmental issue that characterizes current practice as bad.
- Builds a mosaic– building behaviour change piece by piece, and creating stronger associations over time between the effects of climate change and the ‘commonsense’ actions that more and more New Zealanders are taking.
- Does what can already be done using existing technology and knowledge

The government is sincerely interested in engaging with all sectors and communities as it considers a wide range of policy responses to climate change. I want to build a comprehensive and durable consensus as part of our process of developing policies that will affect all communities throughout New Zealand.

As part of this, I want people to understand the context in which policies will be framed. The essential elements are that:

- Climate change is a major economic and environmental and social issue that affects us all and that will be with us for the foreseeable future
- Policies to deal with climate change will have to be durable over the long term – short term responses are relevant but not enough
- NZ must be part of a concerted international effort to combat climate change – we have to pull our own weight and try to influence other countries that can make a difference.
- There will be some economic cost – not excessive – we will still grow in prosperity but we will focus on climate change not Kyoto.

The Government's work programmes are framed within this context and have three main objectives:

- to develop long-term solutions to climate change issues
- to take short-term measures to reduce greenhouse gas emissions that are consistent with long-term approaches as we transition to a way of life that reduces our greenhouse gas emissions and secures a prosperous future
- to adapt to the impacts of climate change

Short term, we will be concentrating on policies which focus on sectors of the economy, but it will be most important that the policy initiatives we have in the short term are consistent with our longer-term policy settings.
The cost does not arise from Kyoto, it arises from the need to change our emissions from business as usual as we transition. Our policies will try to achieve practical reductions at the lowest cost. They will involve a mix of regulatory steps and economic instruments.

As we advance our 15 work programmes, we will be talking with organisations and interested groups throughout the country.

Amongst other things, the Ministry for the Environment will hold workshops on adaptation, and is convening a focus group of industry experts to provide advice on the implications of options around alternatives to the carbon tax including emissions trading.

The Ministry of Economic Development (MED) and EECA are in the process of meeting with business representatives to discuss future energy directions for development of the NZ Energy Strategy and to provide comment in relation to the National Energy Efficiency and Conservation Strategy.

Once a draft is produced it will be widely consulted upon. Already, helpful documents have been produced by yourselves, IPENZ, the Centre for Advanced Engineering, and the Centre for Energy.

The Ministry of Transport is working with EECA and MED as well as transport industry associations on a range of issues including vehicle emissions, biofuels, public transport, fuel efficiency and fleet purchasing. Fleet efficiency is an area where I encourage you to continue to engage at ministerial and official level.

Engaging with industry organisations on proposals for forestry policy and agriculture policy is a high priority.

The key challenge is to strike a balance between flexibility around the options and uncertainties we face, while providing enough direction to provide a reasonable level of certainty that the strategic objectives we decide to pursue will be achieved.

It's a challenging road ahead of us, but this government is committed to making a difference, and to bringing New Zealanders along with us. And I expect many of you here today to play an important role in achieving those goals.

Thank you.

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