Source: New Zealand Parliament
Media Release
Organisation: Finance and Expenditure Committee
For release: 1 October 2024
Climate adaptation inquiry completed
The Finance and Expenditure Committee has completed its cross-party inquiry into climate adaptation. The committee’s final report is available on the Parliament website at this link. The list of recommendations made by the committee are included below.
What happens next?
- The Finance and Expenditure Committee has written to Parliament’s Business Committee asking that it organise a special debate in the House.
- The Government has 60 working days to respond to the report in writing. When received, its response will be available on the Parliament website at this link.
- The report will inform the development of a policy framework for how New Zealand will adapt to climate change. Read more about the framework on the Ministry for the Environment website at this link.
- All evidence and advice that the committee received has been published on the Parliament website at this link.
List of recommendations by the Finance and Expenditure Committee:
Objectives, principles, and system design:
- We recommend to the Government that the climate adaptation framework should have the following objectives:
- Minimising expected long-term costs—Minimise expected long-term costs to the Crown and society from the impacts of natural hazards on where people live and work and the associated infrastructure. This will include managing the Crown’s fiscal exposure and other social costs and incentivising investment in the long-term interests of New Zealanders.
- Ensuring that responses and funding support to property owners, if any, are predictable, principled, fair, and rules-based wherever possible—Give as much clarity and certainty to New Zealanders as possible about the Government’s response to adaptation challenges and the roles of insurers, local government, iwi/Māori, and other groups.
- Improving information flows about climate risks and responses—Increase consistency of and access to quality information about hazards and risks to support sound decision-making.
- Addressing market failures and supporting market efficiency—Contribute to maintaining effective housing, financial, and insurance markets. Focus on areas where there is market failure.
- Achieving a balance between central government leadership and community-led approaches—Empower individuals and communities by taking a decentralised, rather than top-down, approach.
- Ensuring people have the incentive and the ability to manage risk—Central government should focus on ensuring that others, including banks and insurance providers, have the incentive and ability to reduce risk where they can. Decisions and resourcing for adaptation should sit at the lowest level that internalises costs. This will encourage a more efficient response and reduce moral hazard created when individuals or groups do not face the downside risk from their own decisions.
- Reducing hardship and supporting an equitable approach—Reduce hardship due to the impacts of climate change and adaptation. Consider that distributional effects and associated hardship of price impacts are managed over time.
- Upholding te Tiriti o Waitangi—The adaptation framework should ensure that the Crown is fulfilling its obligations as a partner in te Tiriti o Waitangi. The Government should work with iwi/Māori to develop what this means in practice for the adaptation framework. Options could include:
- resourcing for planning and adaptation action
- bespoke arrangements that recognise whenua Māori and cultural infrastructure, similar to the Kaupapa Māori pathway in FOSAL (Future of Severely Affected Land)
- incorporation of mātauranga Māori in risk assessments
- collaboration in decision-making and governance.
- Allowing asset prices to better reflect long-term natural hazard risk—The more that asset and insurance prices reflect risk, the more efficient outcomes will be. However, price impacts that arise as risk increases over time and the associated hardship may be considered inequitable.
- System clarity and continuity—There needs to be alignment across policy, including resource management and emergency management systems. The system should also be consistently implemented and developed over time, rather than being subject to significant changes or reversals.
- We recommend to the Government that the climate adaptation framework, in seeking to achieve its objectives and navigate trade-offs, should be guided by the following principles:
- Fairness and equity—The framework should support fairness and an equitable approach for and between communities and across generations.
- National consistency—Standards and processes should be broadly consistent across regions to ensure fairness.
- Subsidiarity—Decisions and resourcing should sit at the lowest possible or practical level that bears the direct impact of decisions.
- Local flexibility—Communities should have the opportunity to tailor adaptation responses to local circumstances and preferences.
- Incorporating the specific rights and interests of Māori—Iwi/Māori should have the ability to make their own decisions and be involved in governance: a partnership approach.
- Fair warning—Individuals should be responsible for managing their own natural hazard risk when making decisions. The longer the information about the risk has been available, the less case there is for socialising the cost if the risk is realised.
- Minimising moral hazard—Situations should be avoided where property owners are disincentivised to manage risk because they do not face the full costs of risks materialising.
- Accountability—All actors in the system take the actions they are responsible for.
- Transparency and clarity—Rules are applied, and seen to be applied, clearly and consistently.
- Consideration of co-benefits—Consideration of the costs and benefits of mitigation actions should include co-benefits (such as emissions reduction, improving biodiversity).
- Evidence-based decisions—Decision-making is resourced and supported by data, information, local knowledge, and mātauranga Māori where available.
- We recommend to the Government that the climate adaptation framework should include meaningful performance reporting measures that can show how the framework is performing over time and the extent to which it is achieving its intended outcomes.
Who does what?:
- We recommend to the Government that there should be a comprehensive national framework set out in legislation that establishes a clear mandate for local and central government, and resourcing and financing arrangements, as it relates to climate adaptation. The framework should establish a system where all actors are incentivised and able to act on climate adaptation.
- We recommend to the Government that all decisions about infrastructure, planning, and development must consider climate adaptation. This includes policy workstreams such as regional deals, the infrastructure pipeline, the Regional Infrastructure Fund, the replacement for the Resource Management Act, and interim planning measures that prevent development and intensification in risk-prone areas.
- We recommend to the Government that there should be a lead agency on climate adaptation that can support an all-of-government approach, partner with iwi/Māori, interact with the public and key stakeholders, and have responsibility for reporting on climate adaptation progress and the framework’s performance.
Who pays for investment in climate adaptation?:
- We recommend to the Government that it work with local government, researchers, and the private sector to compile information about what is currently being spent on climate adaptation and improve estimates of the potential future costs of adaptation.
- We recommend to the Government that investment in climate adaptation should be paid for by applying a combination of the following principles: beneficiary pays, exacerbator pays, public pays, and ability-to-pay.
How are costs shared for residential property retreat?:
- We recommend to the Government that a key consideration of the adaptation framework should be to ensure there is adequate housing for people who need to relocate, including those who do not own their own property.
- We recommend to the Government that it consider the Expert Working Group on Managed Retreat’s recommendations regarding the Government’s role in planned relocation.
- We recommend to the Government that it consider the Expert Working Group on Managed Retreat’s statement that: “avoiding hardship by structuring funding so as to provide adequate housing to those who must relocate was a key consideration. Based on the outcomes and principles for planned relocation and funding, we did not consider that preserving people’s wealth or protecting property owners from the risks of property ownership were legitimate objectives of the funding system.”
- We recommend to the Government that any policy work it undertakes regarding residential property retreat or managed relocation include a focus on affected renters and people who do not own property.
- We recommend to the Government that it investigate the idea of proactive financing instruments, working alongside banks and insurance companies to do so.
- We recommend to the Government that it undertake further work to identify what amendments to legislation and regulations would be required to enable residential property retreat.
Kaupapa Māori:
- We recommend to the Government that the climate adaptation framework should involve bespoke arrangements for whenua Māori, recognising the different models of land ownership and the effects of climate change on that land.
- We recommend to the Government that the climate adaptation framework should recognise a role for mātauranga Māori alongside other knowledge systems.
Data and information:
- We recommend to the Government that it develop an accessible public data commons for data on natural hazard and climate risk, with the aim of improving the data’s quality, consistency, and availability.
- We recommend to the Government that it prioritise funding research that seeks to improve the data on natural hazard and climate risk.
ENDS
For media enquiries contact:
Finance and Expenditure Committee Staff
fe@parliament.govt.nz
