Another sign of softening economy

September 3, 2019

Fewer new vehicles are being sold:

For the fourth month in a row, fewer new vehicles were sold in August compared to the same month last year confirming that the overall market for the year will be down on 2018.

Motor Industry Association Chief Executive David Crawford says that for the month of August the number of new vehicle sales were 4.5% lower than August last year.

He says overall year-to-date sales were down by 5.1% percent on the first eight months of 2018, a reduction of just over 5,400 fewer vehicles sold in 2019 to date.

“Growth has disappeared from the 2019 market and we are expecting an out turn for 2019 at about 6% below 2018 levels.” . . 

 Commercial vehicle registrations of 4,101 were down 10.1%,  which is 460 vehicles compared with sales last August. That is another sign the economy is softening and confirms surveys showing business confidence is low.

The anti-car brigade might be pleased with this news, but it’s not fewer vehicles in total, it’s fewer new ones.

This means people are buying second-hand or keeping older vehicles longer rather than buying new more fuel-efficient and safer ones.

 


Business blues deepen

August 30, 2019

Business confidence has fallen to the lowest point since the global financial crisis a decade ago:

The further collapse in businesses’ confidence and in expectations of their own activity is an indictment on the Ardern Government’s economic management, National’s Finance spokesperson Paul Goldsmith says.

“The most recent ANZ Business Outlook survey shows a net negative 52 per cent of businesses are pessimistic about the economy under the bad economic management of the current Government.

“To make it worse, businesses’ expectations of their own activity have fallen to a net negative for the first time since 2009 when the New Zealand economy was in the midst of the Global Financial Crisis. . . 

“When businesses lack confidence in the economy, as they do under the current Government, they are less likely to expand, invest in new staff or lift wages.

Reluctance to expand, invest or lift wages is even more likely when businesses’ expectations of their own activity are so gloomy.

“There has been a sharp decline in the New Zealand economy under this Government. Economic growth has decreased from around 4 per cent down to 2.5 per cent, per-person growth is amongst the worst in the OECD and business investment has fallen from 5 per cent a year under National to just 0.6 per cent under Labour.

“New Zealand should be doing well. The prices for goods we export are near historical highs meaning any effects from global uncertainty and trade tensions haven’t affected our exporters as of yet.

In spite of that farmers are in a similar frame of mind to that during the ag-sag of the 1980s. Uncertainty and  lack of trust in the government are compounded by fear of what it is going through inflict on the farming sector.

The ANZ survey shows the business blues have deepened in towns and cities too.

“Sadly the current Government’s bad economic management have hurt our economy.

“The Government have added costs to businesses and families with higher taxes and more regulations, they’ve created massive uncertainty and they’ve demonstrated incompetence, most famously with KiwiBuild and their woeful infrastructure policies.

“National will restore business confidence and revive our economy so that we can lift our aspirations, both in what we can earn and in what social challenges we can overcome.”

A thriving economy isn’t just about businesses doing well, it’s about job security, export income and the ability to invest in solutions for social problems.

The government has gone quiet on wellbeing with good reason. Businesses without the confidence to expand, invest and lift wages are a symptom of economic illness and that makes a very shaky foundation for wellbeing.


Labour pains National delivers

July 31, 2019

Is this how the National Party and its supporters are seen from the outside?

This is not the kind of stuff to you would expect to get the National Party faithful standing and applauding. It’s not a law and order policy or tax cut or a primary sector subsidy – it’s new health spending. This is the kind of thing Labour does.

Is it any wonder National is perceived as having a good head but too often not credited for having a heart if this is how a political commentator thinks?

Compassionate and effective social policy is what any good government does and it’s what motivates most members of any political party – making the country better for people.

National usually gets credit for economic management but, as the above comment show the reason that matters and what it is able to do and does do with the money it carefully manages, is lost.

A growing economy, and the policies that contribute to that are important not as an end but as the means to pay for the social policies and infrastructure that makes life better for people.

This government would have us believe it’s the first government to care about wellbeing.

Every New Zealand government in my memory has cared about wellbeing and done its best to improve it, albeit with varying success.

Making life better for people was the aim of Bill English’s social investment initiatives. They aimed to not only make life better for the people who were helped into independence, but better for us all by reducing the long term financial and social costs of benefit dependence.

Under this policy the number of people on benefits, and the long term cost of that, were dropping. Under this government both are increasing.

The big difference between this government and the last one, is that National understands the difference between the quality of spending and quantity and that sustainable wellbeing depends on a foundation of a strong and growing economy.

By contrast, the current government thinks more spending is better spending regardless of the results and the cost to those who pay.

National governs with head and heart, the Labour-led one puts feeling ahead of thinking.

That’s why National is able to deliver but in the long term Labour only pains.

National Finance Spokesman Paul Goldsmith explained the link between the economy and services in his speech to the party’s annual conference.

You will have noticed a strong economic theme to the start of the conference.

It’s true, we in the National Party do bang on a lot about the economy.

It makes me think of my old Nana, who always said, ‘money isn’t everything’.

Of course it isn’t.

As one of the richest men in the world, Warren Buffett, put it, ‘it doesn’t matter how much money you’ve got, if you’re not loved by the people you want to love you, life is a disaster’.

It’s similar with countries. Good government is just as much about preserving and enhancing what is special about this country.

That, to me, is the quality of our environment, our social cohesion, our relatively high trust and low corruption traditions, our commitment to the rule of law, freedom and tolerance of different views, our sense of security.

All these things are incredibly important and should never be taken for granted.

So the economy is not everything, but it is important.

Not because we revere the great machine for itself – it’s simply a means to an end.

The economy is about people. It’s about you, me, our families and our neighbourhoods.

To me, the point of a strong economy is to enable New Zealanders to do the most basic things in life well.

A strong economy improves our chances of finding satisfying and well-paying work so that we can look after ourselves and our families – the most fundamental task each of us have.

A society based on the assumption that its average citizen can’t or shouldn’t be expected to look after themselves and their families is doomed.   

That’s not what we believe.

Work itself, in its countless varieties, brings the opportunity to make a contribution to our world and the people in it, whether we’re providing someone with a new hip, a new app, or a cup of coffee with a smile.

And third, if we do well, we can afford to have some fun in our leisure time, and maybe if we have some energy left do something in the neighbourhood; on the barbecue for the school committee, or whatever.

That, to me, is the good life to which we aspire. 

As well as generating work and opportunities, good economic management and a strong economy enables the country to have better public services that improve our lives – a quality education, access to world-class healthcare when we need it, decent transport infrastructure so we can get home on time, the reassurance of superannuation when we’re old.

There are times in everyone’s life when we need help. At certain times of their lives some people can’t look after themselves and their families; the stronger our economy is, the more we can help.

Now, good economic management is not just about spending money, it’s about generating it. . . 

What’s the goal? To deliver a strong economy and world-class public services that enable Kiwis to look after themselves and their families, to find satisfying work, and to lead full lives.


Reject blanket afforestation of farmland

June 10, 2019

Government policy which subsidises forestry is a bigger threat to food production, rural communities and the New Zealand economy than the ag-sag of the 1980s.

North Otago was particularly hard-hit by the stripping of subsidies that coincided with high interest rates and soaring inflation.

Many farms were too small to be economic and the district was plagued by recurring droughts.

Predictions that farmers would be driven off the land in great numbers proved to be an exaggeration. But many jobs on farm and in businesses that serviced and supplied them were lost and very few of the farmers’ adult children who left the district for education or work returned.

Farmers gradually adjusted to life without subsidies and are stronger for it. Inflation and interest rates returned to manageable levels, irrigation provided protection from droughts and created jobs on and off farm.

There will be no recovery and resurgence of rural communities when productive farmland is replaced by forests.

Subsidising forestry and making it easier for foreign buyers to buy land for forestry than farming is already killing on-farm jobs.

50 Shades of Green paints the local picture:

  • 100,000 stock units sold to forestry in the Wairarapa these last twelve months
  • Economic impact on Wairarapa community? Direct spend at $125/stock unit: $12.5m. Plus four times multiplier effect.
  • — 1,000 hectares sheep/beef farm creates seven jobs.
  • 1,000 hectares plantation forestry creates one job.
  • Tree planting by temporary immigrants… most of the wages are sent home.
  • — Rural communities will be decimated.
  • — Farm land prices have been pushed up by these taxpayer
    subsidies
    .

It’s not just in the Wairarapa and it’s not just farming jobs that are lost. Fewer people on farms means fewer children in schools, fewer people buying locally and fewer work opportunities servicing and supplying farms and farmers.

It  means less food produced for the local market and export and less export income.

It is also counter to the Paris Climate Accord which states that climate mitigation should not be at the expense of food production.

This is the motivation for the petition asking that legislation which incentivises the blanket afforestation of farmland be rejected:

. . .There has never been such an imminent threat to food production in New Zealand as that which looms over us in the form of current government policies which align across multiple government portfolios designed to meet specific policy agendas.  These agendas combined, create a massive assault on the viability of rural businesses, on sustainable land use, on infrastructure and ultimately on the lives of those living the experience of this assault.

We need your support as we fight to provide a voice for the industries and communities rendered defenceless in the face of ill-conceived afforestation incentives which are already leading to unemployment, displacement and declining standards of living for those left behind.

The tension between competing land uses has long existed between forestry and pastoral farming; however never before has a government provided the mechanisms for one to obliterate the other to the extent that this potential now exists.

It is this case that we ask your support in defending.

Not that forestry should be maligned, but that the Government of today and Governments going forward must be made to see that crippling small towns through distorted market incentives is morally wrong, economically foolish and will impact vulnerable individuals and communities for generations to come.

It’s not just morally wrong and economically foolish, it’s socially destructive, it’s not backed up by science and will do more harm than good to the environment.

The government ignored advice from Environment Commissioner Simon Upton who said the science shows trees could off-set methane emissions but would not offset fossil fuel emissions.

If New Zealand produces less food, it will be replaced by meat and milk from other countries whose farmers are far less efficient than ours.

We have already picked up the torch of environmental restoration and we willingly carry it as the legacy we leave for those who come after us; in this we are already united, but a crippled community can restore nothing, and an empty community will not care.

We ask you to join your name to our petition and stand alongside us as we defend our common right to live and work on the land, growing food for our country sustainably, ethically and for the benefit of all New Zealand. 

Some areas should never have been cleared and should be replanted in trees.

But there is no economic, environmental or scientific justification for turning productive farmland into forests.

 

 


Bold intentions bad policy

May 22, 2019

Farming leaders are meeting the government today to discuss problems with the Zero Carbon Bill.

National MPs voted for the Bill at yesterday’s first reading but expressed serious concerns over details:

Hon SIMON BRIDGES (Leader—National): The National Party takes climate change seriously. I want to just reflect on the fact that, as a Minister of the Crown, in my last three years I lead on electrification of our vehicle fleet, of our energy system, and wider than simply electricity, that when it comes to renewables, we saw New Zealand go from 65 percent in electricity to some 85 percent—and, on a good day, 90 percent. By the way, the trend right now is downwards. So, we understand these issues. We take these issues seriously.

I gave—in fact, in one of my first speeches as leader of the National Party, at Field Days, on the issue of climate change last year. I set out our principles and our desire to be bipartisan on this issue, because I agree with James Shaw that it is too important—economically, socially, and, clearly, environmentally—for petty partisanship. Can I acknowledge Todd Muller in relation to that, for having done an outstanding job of thinking through the difficult and the intricate economic, social, environmental issues that go with this area of reform, and for working hard with James Shaw, with the Prime Minister, and with me on this law change.

What I said in that speech at Field Days was, yes, we believed—in fact, before the Government had stated their position, I think—in an independent advisory climate commission, with the requisite expertise economically, socially, environmentally, to do the work and the mahi required. I set out our principles in this area that we would follow and that we think should be followed on climate change. It is science based—that we work heavily on innovation and technology; that there are appropriate economic signals; that we are in step with and work closely with our international partners; and that we think very carefully and understand the economic impact of this. I am glad to say that in the bill that is before this Parliament right now those principles that we outlined are there, as is the split treatment of gases that we made clear in that speech, and our position was the right approach. Those principles, those things, as I say, are in the bill. For those reasons, the National Party will vote for this bill at the first reading, but I want to be very clear with the Government: on this bill, we have real differences with the Government, and I’ve made them clear to the Hon James Shaw, to the Rt Hon Jacinda Ardern, and indeed to the New Zealand First Party. We need to see change in this law.

The primary area of difference that we have—it may not surprise the Parliament—is in relation to the methane target. There is, in short, no satisfactory basis for setting the targets in 2030 and 2050 as high as the Government has chosen to do in this bill. The 2030 target is negative 10 percent, the 2050 target is negative 24 to 47 percent, and I reflect, when I think about the 2030 target, on what James Shaw has realistically, I think, said himself: that emissions in New Zealand are going to rise into and beyond the mid-2020s. So he is making it quite clear to New Zealand, in terms of methane and agriculture and what needs to be done, that that change is literally in the last three, four, five years before that target is to be met in 2030.

The stark reality is that the science isn’t there yet. I am all for investment in the science. I argued, in the previous Cabinet, that we needed to increase the funding we were making in Palmerston North in science in the Global Research Alliance to make sure— . . 

I say, actually, that biotech is an incredibly important part of this answer. I think it’s a tragedy that the Green Party outright rules it out and the Labour Party isn’t sure of its position. Actually, Sir Peter Gluckman and people like William Rolleston, who know what they’re talking about, have made quite clear that it is an essential part of the answer. The reality is that, without doing that, by 2030 we will be culling significantly our herds. That’s not alarmist; that’s the reality of the situation. When half of our exports around the world are food, Mr Peters, who’s shaking his head on this issue, that’s how we pay our way around the world, and we take that seriously as well.

No one else—none of our partners—are doing this. They may have moved in other areas. There is not a country in this world, no First World nation, that is moving on agriculture, in what is a global problem that requires global leadership. But also, if we act unilaterally, it simply sends that production offshore, and 2050—a target set by the other side, unilaterally cherry picked, I’m sorry to say, for political purposes from parts of the United Nations report, but economically disastrous, wrong on the science. Don’t trust me; ask the Parliamentary Commissioner for the Environment, ask Professor David Frame, ask many of the experts in the science throughout New Zealand who argue for a much lower target of 10 to 22 percent methane reduction, a target too high in this bill for the National Party and for New Zealand. The whole purpose of this bill, it seems to me, in dealing with climate change is based around an independent climate commission that provides reasoned, worked-through, evidence-based advice, and my position certainly is that that is where we should be sending the methane targets for an answer on that issue to be thought through. The Government will say that’s non-binding but certainly, if done well, difficult to ignore, and I’ve made those points to the Prime Minister and others.

I’m also concerned and the National Party, on behalf of New Zealanders, is deeply concerned about the wider economic impact of this law. We take climate change seriously, but we cannot accept—indeed, we believe it’s naive—when James Shaw stands up in this House and says that it’s the single greatest economic opportunity for us in at least a generation. James Shaw—I respect him; he believes we can bend the arc on climate change quite quickly, rip the plaster off and get to some sort of economic innovation nation nirvana. Well, the reality is not that simple. Short of someone inventing the new iPhone or the next great big thing, this will have very real economic consequences on working Kiwis, on working New Zealand families and on their petrol costs and their electricity costs and their incomes and their jobs. Indeed, the RIS on this bill—the regulatory impact statement—makes quite clear that, even with a tailwind, there is $300 billion of cost to 2050 on the New Zealand economy and New Zealand workers and families; a reduction in gross domestic product by 9 percent in GDP, $10 billion to $12 billion a year; and indeed at 2050 a $45 billion smaller economy.

So I say: let’s have an honest discussion with New Zealanders about this—the costs and the trade-offs—but let’s be clear, Hon James Shaw, Rt Hon Jacinda Ardern, that those costs are real. There’s a phenomenon in our rural communities, which I’m sure others in my party will speak about—but what is happening right now with dairy conversions and other farming conversions and the very real effect of this Government’s policies, the billion trees and so on, for no good, that’s actually resulting in a hollowing out already in some parts of New Zealand. We worry and we’re concerned about that on behalf of New Zealand.

We get climate change, we want bipartisanship, but all New Zealand needs to come on this journey. We want to see this bill changed—it’s essential that it is—so that we take out the politics; we do this on the policy. I urge New Zealanders to be heard on this, from the students to the farmers, right around the country.  . . 

TODD MULLER (National—Bay of Plenty): Thank you, Madam Deputy Speaker. I rise to speak for the first time on the Climate Change Response, (Zero Carbon) Amendment Bill. Just over a year ago, our leader, Simon Bridges, in the Fieldays, outlined our approach that we would take in the negotiations with the Government over this bill. He touched on some of the principles that he felt, from a National Party perspective, were absolutely critical to inform this commission’s judgment. 

The first was the importance of broad science. The second was the fact that we needed as an economy to have access to innovation and technology to assist us on this journey. The third was that we needed to calibrate our response, aligned with our trading partners in the global response. Fourthly, we saw a key role in the emissions trading scheme as a signal and an incentive for the change over time. Fifthly—and most critically—that we assure ourselves of the economic costs of this transition. At the core of the National Party approach to this issue is that climate change is an issue that we have to confront as a collective country, but we do it best when we are informed in a dispassionate way about what the science is suggesting is available in terms of innovation for us to apply and what the economic costs are for this change. 

We have had a fair discussion with the Government over the last 10 or 12 months. As I noted the last time I spoke—last week—for most of that period, it has been a very forthright and goodwill-based conversation between myself and my opposite number, James Shaw, and we are very pleased to see that in this legislation are the key tenets that underpin our principles and approach to climate change. There is science to inform the conversation and judgment of the commission. Innovation and the availability of that innovation is a critical part of their judgment. So is global response and so is the economic costs that we need to reflect on as a country, as is the importance of this commission being advisory and also the approach with respect to split gases. But, clearly, we have a challenge with respect to the target that has been landed with respect to methane. 

I listened closely to what the Prime Minister said, and her speech today, more than anything else, reinforces the importance of having a commission to reflect on where this methane target should be. She spoke with authority in terms of her own interpretation of what the science says. She talked to an Intergovernmental Panel on Climate Change report which says that minus 24 percent to minus 47 percent of an interquartile range of four illustrative pathways out of 85, and each one of those pathways is hugely challenging. Most of them actually don’t see the economies reaching the targets, and they say in that report they are not to be used for national guidance. She used one line out of that and said, “That that works, and I’m cloaking science and the credibility of my comments around that.” It is nonsense. That interquartile range is just one line from a series of illustrative pathways that can be considered by countries as they walk this journey. David Frame says methane should stay at minus 10 percent; the Parliamentary Commissioner: minus 10 to 22 percent. 

The point is: why are we having this debate in this House? None of us are qualified, from a scientific perspective, to hold a view, when the economic cost of getting this wrong is eye-watering. This is not something that you can just wash away with lovely words. If we get this wrong, regional New Zealand will not look the same again. If we get this wrong, the standard of living that exists in this country will be materially impacted. The whole purpose of a bipartisan conversation around establishing a commission is for them to look at the competing objectives of science, of available innovation, of what the rest of the world is doing, and of what the economic impacts are.

The emphasis is mine because this is very important – the cost of getting it wrong is high in both economic and social concerns for no significant environmental gains.

The view expressed by the Government that the primary pinnacle perspective that floods all of this legislation is that we must do our bit to keep the global temperature within 1.5 degrees Celsius. Well, the global temperature is already over 1 degree Celsius, it’s pushing to 1.3 degrees Celsius, and this country is 0.17 percent of global emissions. The very idea that our collective effort will somehow impact the global temperature is nonsense. We have to call this for what it is. One point five is an objective in this legislation, it is one of the perspectives that the commission has to bring to bear along with what the science says is possible, what innovation is available to apply across the economy at a cost that works, and what the economic impacts are for New Zealanders.

The regulatory impact statement talks to the modelled cost on this economy between the current gazetted target, that we have supported previously as the National Government, and what is suggested in this bill. The sum of the difference is $300 billion; $45 billion different than what it would be if we stayed with the National Party’s target. Prime Minister, I’m sorry, those modelled assumptions assume that electricity has been integrated across our entire transport sector, assume that electricity is in our industrial heat, and assume that we have found technology to support our opportunity in the agriculture sector—all those innovations are baked into the model and it still costs us $300 billion.

That’s a lot of assumptions.

So for us to sit here and say “This is a new nirvana and we’re just going to walk there together.” is not giving New Zealanders credit. This is hard transitional stuff. It will cost and it will continue to cost, there will be opportunities there as well, but it is going to cost. The Government’s own regulatory statement talks to the scale of the cost. I’d venture to suggest that there would not be a bill that has been in front of this House in the last two decades that has a regulatory impact statement saying that the cost is $300 billion. But on this side of the House, we stand willing to support a conversation around a commission that can guide us; but to frame this up as a headlong run, to commit to 1.5 degrees Celsius even if the rest of the world doesn’t, and that those other conditions are secondary is flawed, from our perspective—seriously flawed.

I am not arguing that we do not progress our own emissions reduction journey over the next 10, 15, or 20 years. I am not suggesting that because it’s $300 billion we do nothing, because the world expects us to play our part. What I am saying is that our communities expect us to be prudent and to be measured and to use evidence as we slowly make this transition, because if we get it wrong, the Taumarunuis, the Te Kūitis, the small communities who have been so strongly underpinned by our agricultural exports and activity, the most efficient and effective emissions efficient food producing sector in the world—I repeat that for people listening at home: our agricultural sector is already the most emissions efficient food producing sector in the world. No one here suggests that New Zealand does not put its shoulder to the wheel, but we must not be so naive that we get crushed under the axle. We need to be seriously measured and prudent as we step through this. That is why, when we go to the select committee, I hope—and I echo my leader’s comments—from students to farmers to academics to those who just have a passing interest in this: please, we want to hear your voices. We want to hear the scientists—you’ve rung me, I want to hear you at that select committee, because, as James Shaw has said himself, this is an opportunity but we have to do this together.

Hon Dr NICK SMITH (National—Nelson): National is supporting the Climate Change Response (Zero Carbon) Amendment Bill because a climate change commission is a good idea that will help New Zealand make progress on the challenging issue of climate change. This is the National Opposition being both responsible and being constructive about one of the most challenging issues that faces our country and, actually, faces the world.

I brought five climate change – related bills to this Parliament during the last Government. On not one did the Opposition support it. I do say it is a big step for an Opposition party to say, yes, it wants to back this idea because it’s constructive.

I’m the only member of this House that was here when New Zealand signed the United Nations Framework Convention on Climate Change in 1992. You might not believe it, I was even younger than Chlöe Swarbrick, and I was privileged to be part of the New Zealand delegation to Rio de Janeiro when that initial convention was signed. But if there’s an important lesson from the intervening 25 years that this Parliament must recognise it’s that good intentions are not enough to be able to address this issue.

I’ve totalled up that over a hundred countries have made bold commitments on climate change that have failed and come to naught. The reason the Climate Change Commission is such an important part of the solution is that it will enable us to be able to have a more constructive, a more open, and a more honest conversation about how we actually can make progress on this issue. When the world signed up to the UN convention on climate change, global emissions were 24 billion tons. The commitment was to stabilise them. Today they’re 37 billion tons, or 60 percent greater.

I have to say, I’m a bit tired of big, bold commitments that set ambitions way beyond members of this House, or beyond the term of the Prime Minister or the climate change Minister, without the grit as to how you’re going to get there. I remind this Parliament that Prime Minister Helen Clark in coalition with the Alliance Party, including the Greens, came to Government in 1999. They said it was our “nuclear-free moment”. Sound familiar? They said their goal was carbon neutrality. Well, what happened during the nine years of that Clark Government, supported by both the Alliance and then the Greens? Emissions went up by 10 percent. We actually went backwards on renewables from 73 percent of our electricity being renewable to 65 percent being renewable. So my plea to this House is to not be carried away with big bold intentions but to actually look to the policies that will make a material difference to our country and globally making a difference on this issue.

I remember when our party in Government worked hard to secure the Paris Agreement. Members on this side of the House say, “Actually, New Zealand needs to do its fair share, but the solution to this has to be globally.” and I’m proud of the role that we played in securing the Paris Agreement and of New Zealand’s commitment to a 30 percent reduction by 2030. But the part that I do have to challenge parties opposite—and this part, for, me is extraordinary—is that in all the talk we know that reducing greenhouse gas emissions is the key of this issue. And I choked on my cornflakes. I literally could not believe it—that when we’re describing climate change as an emergency, when we’re saying it is our nuclear-free moment, to hear the Minister for Climate Change say that he expected emissions to continue to increase until 2025. I’m sorry; this has got an awful sound like KiwiBuild and some of the other big, bold intentions of Government—of not having followed through. Effectively, what James Shaw said on the radio is that this Government would not do as well as the previous Key Government in making progress, and that would be a grave disappointment.

I also want to make a plea for scientific literacy around the issue of climate change. I totally support the provisions of this bill that set up the Climate Change Commission. The reason the Climate Change Commission is a good step forward is that with the expertise, with the setting of budgets—not just big, bold targets but actions—it will enable us to get down emissions and that will help us get there. But scientific literacy is important. This notion of this bill being called “Carbon Zero” is really a misnomer. The first thing is, carbon is not the problem; carbon is at the heart of life. There would not be life on this planet without the existence of carbon. The issue is greenhouse gas emissions. Some of those greenhouse gases do not even have carbon in them: 11 percent of New Zealand’s emissions are nitrous oxide, which we are—I’m sorry; where’s the carbon in nitrous oxide? If this bill was to be scientifically literate—and I continuously have a problem with the Green Party in not being scientifically literate—it should be a bill referring to greenhouse gases, at the very least carbon dioxide and methane that are the core issues.

Now, my colleagues have rightly challenged the notion of these incredibly bold targets around the issue of methane, one of the significant gases for New Zealand. Here’s my problem. I haven’t heard a single Government member or the Minister tell us how a mid-range on a 35 percent reduction in emissions can be achieved. You know how I think they can be achieved? I think our best hope is biotechnology. When I look at the development by Landcare Research of ryegrass that can achieve as much as a 20 to 25 percent reduction in emissions, I see light, I see hope, I see a solution. For me, what is extraordinary is for the Government to set targets for the agricultural sector that go beyond what the Parliamentary Commissioner for the Environment and scientists have said are realistic, and then take away from our agricultural sector and our farmers the very tools that would enable us to achieve those targets. So my last challenge to the Government is let’s have a conversation about the actions.

I say to Minister Shaw, let’s have an honest conversation about the cost. Ten years ago, I bought an electric car. It cost me $84,000. The petrol equivalent was $26,000. There is a real cost. My community at the moment is looking about getting electric buses. The cost of an electric bus is about $800,000, compared with $180,000 for the diesel equivalent. There is a real cost. If we want to convert over to wind, solar, and those energies, let’s have the honest conversation that there is a real cost.

For those who pretend that those costs can be ignored, I ask them to look at the yellow vest protests in France, to realise that if we are to win these arguments, we need to take New Zealanders with us. Blind open commitments that say there are no cost impacts on New Zealanders, in making progress on climate change, risk repeating the mistakes I’ve seen of the last 25 years, and it is not being upfront and honest about the trade-offs that we need to have.

I’m very proud to have invited Lord Deben to New Zealand, the architect of the climate change commission legislation in the UK, and of being a member of the Environment Committee that triggered our visit there. In my view, the Climate Change Commission is a step in the right direction, but don’t let any member of this House pretend that establishing a Climate Change Commission is going to take away the really gritty, the really tough, the really difficult issues that we have to work through in our energy sector, in our agricultural sector, in our transport sector, and in our industrial sector, if we’re going to have another round of meaningless targets and not get the runs on the board to really make progress on this huge issue.

If the government wants National’s support for progressing the BIll at subsequent readings it will have to start accepting the science.

It will also have to take far more account of economic and social costs.

The bold intentions in the Bill are no compensation for the faults which make it bad policy.


Asking too much of ag

May 9, 2019

The announcement that methane will be treated differently from other gases under the Zero Carbon Bill ought to be good news for farmers, but it isn’t:

New Zealand’s sheep and beef sector is deeply concerned over the proposed treatment of methane and targets in the Zero Carbon Bill and is calling for critical changes to the bill.

The proposed methane reduction targets of between 24-47 percent by 2050 significantly exceed both New Zealand and global scientific advice and the government is asking more of agriculture than fossil fuel emitters elsewhere in the economy.

The government wants to turn productive farm land into forests and it’s also asking too much of farmers in its methane target.

New Zealand’s sheep and beef sector is committed to playing its part in addressing climate change and acknowledges that in some areas the government has followed scientific advice, such as the split gas approach and proposed ambitious net zero target for nitrous oxide.

“Sheep and beef emissions have already reduced by 30 percent since 1990, helping meet New Zealand’s climate change challenge and we accept we still have work to do,” says Beef + Lamb New Zealand’s (B+LNZ) Chairman and Southland sheep and beef farmer Andrew Morrison.

“New Zealand needs a robust science-based and fair approach when setting targets for an issue which will affect future generations.

“It’s unreasonable to ask farmers to be cooling the climate, as the government’s proposed targets would do, without expecting the rest of the economy to also do the same.

It’s also unfair to expect farmers to follow the science on the need to reduce emissions while ruling out genetic modification which could be an affordable and effective tool for doing so.

Beef + Lamb New Zealand is calling for a fair approach, where each gas is reduced based on its warming impact. An equitable approach requires carbon dioxide and nitrous oxide to go to net zero, and methane to be reduced and stabilised by between 10-22 percent. This is consistent with the advice from the independent Parliamentary Commissioner for the Environment who identified this range as meaning methane would be contributing no additional warming. Any target above a 10-22 percent reduction is therefore asking methane to cool the planet.

“In addition to our 30 percent reduction in emissions, sheep and beef farmers have also conserved 1.4 million hectares of native forest, an area the size of Hawke’s Bay, which is capturing significant quantities of carbon and cooling the planet, which when combined with our free range, naturally-raised farming systems enables our farmers to produce beef and lamb at a lower carbon footprint than many other countries.

“Not allowing trees to offset biological methane, as is allowed for fossil fuel emitters, exacerbates the unequal playing field, and is completely counter to the recommendations of the Parliamentary Commissioner for the Environment.

It’s even more galling when a lot of those trees are planted on farmland.

As a sector which set a goal of being net carbon neutral by 2050, the ability for farmers to offset biological methane on farm through tree planting is a key tool that farmers should be allowed to access.”

The sheep and beef sector is also urgently calling on the government to be transparent and release all the advice on which they based its decision.

“The government’s decision appears to fly in the face of international scientific evidence, which supports reducing and stabilising methane by 10-22 percent as equivalent to net carbon zero.

“As the Zero Carbon Bill currently stands, it will have a dramatic impact on New Zealand’s regional communities and the entire economy, and the knock-on effect will be felt by every Kiwi.”

New Zealand’s sheep and beef sector is worth approximately $10.4 billion, is the country’s largest manufacturing sector, the second largest export earner, and supports 80,000 jobs across the country, both directly and indirectly.

New Zealand’s emissions are around 0.17% of the global total.

If anything we do was going to make a significant difference the economic sacrifice might – just might – be justified. But when anything we do is insignificant on a global scale there is no justification for economic sabotage.

These jobs form the heart of hundreds of regional communities. The social and economic impacts of these potential changes will reverberate beyond the farm gate and hollow out the many regional communities who rely heavily on our sector,” says Mr Morrison.

“Beef + Lamb New Zealand will continue supporting research into greenhouse gas mitigations, as well as its ongoing work with farmers to help them further reduce the methane emissions from their livestock.”

DairyNZ has similar concerns about the methane target:

DairyNZ chief executive Tim Mackle has reconfirmed the dairy sector’s commitment to play its part to reduce its biological emissions, and supports the intent of the direction of the Zero Carbon Bill.

“Our farmers are committed to sustainable farming practices, and need long-term certainty to make business decisions based on reduction targets. We are pleased the Government has listened to the science regarding the short-lived nature of methane, recognising it has a different impact on the environment,” says Dr Mackle.

“DairyNZ supports a science-based approach, where each gas is reduced based on its warming impact. We have not yet seen the Government’s analysis behind the 2050 target range. The 2050 target, of reducing methane by 24 to 47 per cent, is based on global scenarios that are not grounded in the New Zealand context. This range for methane, combined with reducing nitrous oxide to net zero, goes beyond expert scientific advice for what is necessary for New Zealand agriculture to limit global warming to no more than at 1.5° C.

“It is very important to get the range right. If we get this wrong it will have significant impacts on not just the dairy sector, but the economic, social and cultural wellbeing of New Zealand. 

“While we can support much of what is in the Zero Carbon legislation, we will be pushing for the range to be reviewed and aligned with the recommendations made by the Parliamentary Commissioner for the Environment, of 10-22 per cent reduction in methane. When combined with our commitment on nitrous oxide to net zero, this is an equitable, yet ambitious and challenging target, that is grounded in robust science.

“We know our farmers will be concerned by the 47 per cent and what that might mean for their livelihoods. It is not set in stone, and the Bill includes a number of criteria for review including availability of mitigation options, what other countries are doing, and reduction efforts by other sectors. 

“New Zealand is already one of the lowest emissions producers of dairy nutrition in the world per kilogram of milksolids and we want to build on that advantage. Climate change is a global issue and it is good for the world if dairy production stays in New Zealand where we have low emissions for the amount we produce. We believe our premium, grass-based, high nutrition dairy will continue to be in demand well into the future, alongside a range of other options consumers may have.

Sabotaging dairying here will increase global emissions as production from less efficient producers elsewhere is increased to make up the shortfall.

“The 2030 reduction target is the first step, which we know will be very challenging. But there is action that farmers can take, and are already taking, to reduce on-farm emissions. The first step is to understand their emissions and where they come from. As part of our pan-sector Dairy Tomorrow strategy, over the next 5 years each farm will have a farm-specific plan to manage and reduce these emissions.

“DairyNZ remains focused on researching and developing tools to help farmers make choices for how to reduce emissions – through farm systems changes and new technologies. It will take time for some of these tools to develop. We will continue working closely with government to ensure all efforts on farm are recognised, and expert advice and training is made available. This support is a vital part of a fair transition.

Federated Farmers says the methane target will change the country not the climate:

Targets released today for farming’s methane emissions are going to send the message to farmers that New Zealand is prepared to give up on pastoral farming.

“This decision is frustratingly cruel, because there is nothing I can do on my farm today that will give me confidence I can ever achieve these targets”, Federated Farmers vice president and Climate Change spokesperson Andrew Hoggard says.

New Zealand farmers are already playing their part in tackling global warming, and are willing to do more.

“But hearing the government setting arbitrary targets based on a random selection of reports and incomplete data will leave some farmers wondering; ‘what is the point’?

“The 10% reduction target for methane by 2030 gives us a deadline for going beyond net zero more than 20 years earlier than for any other sector of New Zealand. It is unheard of anywhere else on the planet,” Andrew says.

The targets are significantly higher than what is necessary to be equivalent to net-zero carbon dioxide.

The announced methane reduction target for 2050 of 24-50%, when coupled with the target of net zero for nitrous oxide, requires the New Zealand agriculture sector to reduce its emissions by 43-60%.

“Let’s be clear, the only way to achieve reductions of that level, is to reduce production.  There are no magic technologies out there waiting for us to implement.

“At this point in time we have no idea how to achieve reductions of this level, without culling significant stock numbers.

“All Kiwis need to ask themselves one simple question: ‘if we cut our agricultural production by up to 50% over the next 30 years, what is the country going to do for jobs, taxes and community investment, in the future?”

There is no practical, sustainable or viable answer to that question.

 In complete contradiction to the most recent Parliamentary Commissioner for the Environment’s report, New Zealand farmers will also not be able to offset their methane emissions by planting trees.

“Large fossil carbon dioxide polluters can offset their emissions by continuing to buy up land and putting it into forestry, but farmers will not be able to offset their methane emissions by planting trees on their own land.

“Basically pastoral farming is being used to buy the rest of New Zealand time to deal with the fundamental driver of climate change – increased carbon dioxide emissions. That’s the greenhouse gas the government obviously finds too politically hot to handle.”

This government keeps talking about fairness then introducing policies that are anything but fair.

Q: Isn’t a split gas target what the agricultural sector wanted?
A: A split gas target for long and short-lived greenhouse gases is required in order to reflect the dramatically different reduction needed in order to have each gas no longer contribute to additional warming of the atmosphere. The reduction targets announced by the Government go above and beyond what is required for methane to reach net zero carbon dioxide equivalent. We welcome a split gas target but the target for methane itself is not viable.

Q: Who said biological methane doesn’t need to reduce to net zero by 2050, like the other greenhouse gases?
A: The Intergovernmental Panel on Climate Change (IPCC), the Parliamentary Commissioner for the Environment (PCE), the Productivity Commission and most recently the Climate Change Commission in the UK.

Most prominently, the internationally recognised climate scientists from Oxford (including Professor Myles Allen) and Victoria University of Wellington (including Prof. Dave Frame) have published research identifying a 0.3% year-on-year reduction in biological methane would ensure that the gas had no additional warming impact. This equates to a 10% reduction by 2050 (not 2020 as proposed by Government). These scientists have been lead authors in chapters of IPCC reports.

The Parliamentary Commissioner for the Environment Simon Upton, in his 29 March 2019 report ‘Farms, forests and fossil fuels’ (pg. 80) said if New Zealand wished to stabilise the contribution of livestock methane to global warming at its 2016 level, it would need to reduce these emissions by 10-22% by 2050. He said: “Unless large reductions in carbon dioxide emissions are achieved, efforts to reduce methane and nitrous oxide will be of limited long-term value.”

Q: If farmers aren’t required to get methane emissions down to net zero by 2050, as with the other greenhouse gases, isn’t that letting agriculture ‘off the hook’?
A: No. Methane emissions need to only slightly reduce to have no additional warming effect (equivalent to zero gross carbon dioxide emissions). This is because methane is a relatively short-lived gas in the atmosphere.

Under the Zero Carbon Bill targets farmers are being required to reduce another biological emission, nitrous oxide, to net zero by 2050.  Farmers (and processors) are also big users of transport and electricity to harvest/process/get their goods to market, so like other New Zealanders and industry sectors they will bear the costs of reducing carbon dioxide to net zero by 2050.

Q: What’s wrong with the tougher methane reduction targets and deadlines?
A: The announced targets disregard the core principal of all gases being reduced equally in order to have the same impact in reducing global warming. The 10% reduction target for methane by 2030, goes beyond what is needed to achieve no further contribution to warming from methane. This target is expecting farmers to reduce methane 3 times greater than required for methane to no longer contribute to additional global warming.

Essentially this means the 10% methane target is required to be achieved two decades before the target for all other gases.

Apart from the obvious significant economic impacts this is also likely to have the counterproductive impact of increasing global warming, as no other agricultural exporting country is setting such tough methane targets.  Less efficient trade competitors will fill the market gap created by the reduced food production in New Zealand. This concept is known as “emissions leakage”.

Q: Where does the figure of ‘27% – 47%’ reduction for methane by 2050 come from?
A: Good question. There are no Government reports outlining the reasoning for the figures. The Government cannot provide any analysis of how they arrive at the 24%- 47% figure. The numbers are from the 2018 IPCC (United Nations Intergovernmental Panel on Climate Change).  Note these are ‘scenarios’, one of which includes a nuclear power option and another allows for an increase in nitrous oxide emissions.

Q: But can’t farmers just plant trees to offset methane?
A:  No, the Government has specifically prevented farmers from offsetting methane emissions. A coal power station will be allowed to offset its greenhouse gas emissions by buying up farms and planting pines trees but a farmer will not be allowed to offset their methane emissions by planting trees on their own land.

This is contradictory to the recent recommendations by the Parliamentary Commissioner for the Environment, who recommended a landscape approach to forestry offsets. Under the PCE’s landscape approach the use of forestry offsets would be limited to biological methane, and offsetting nitrous oxide would be limited to native vegetation, and fossil carbon dioxide would not be offset at all by planting trees.

The Government’s Zero Carbon Bill announcement makes no distinction between fossil and biological greenhouse gases and operates in a reality where a carbon dioxide molecule is as theoretically stable in a pine tree in Nelson as one in solid coal a kilometre under the ground.

Q: How can farmers reduce their emissions in order to reach the methane target?
A:  Currently the only way farmers can reduce methane emissions is to feed less dry matter to livestock. The Biological Emissions Reference Group (BERG) commissioned work that shows in order to significantly reduce livestock methane emissions in the future without cutting production many currently unavailable and uncertain technologies will need to be developed and commercialized, including genetically modified ryegrass crops.

This is yet another aspirational policy from the government without a plan and without a scientific basis.

It’s also another example of a policy that won’t make a measurable environmental difference but will come at a high social and economic cost.


Socialism kills more than war

December 24, 2018

Bad economic policies kill more children than war:

Recent reports that infants now die at a higher rate in Venezuela than in war-torn Syria were, sadly, unsurprising—the results of socialist economics are predictable. Venezuela’s infant mortality rate has actually been above Syria’s since 2008.

But it’s not all bad news.

The big picture, fortunately, is happier. The global infant mortality rate has plummeted. Even Syria and Venezuela, despite the impact of war and failed policies, saw improvements up to as recently as last year. From 1960 to 2015, Syria’s infant mortality rate fell by 91% and Venezuela’s by 78%. This year (not reflected in the graph above or below), Syria’s rate rose from 11.1 per 1,000 live births to 15.4, while Venezuela’s shot up from 12.9 to 18.6. Meanwhile, infant mortality rates have continued to fall practically everywhere else, and have declined even faster in countries that enjoy more freedom and stability. Consider Chile.

Chile’s infant mortality rate in 1960 was actually above that of both Venezuela and Syria. It managed to outperform Syria by the mid-1960s, but was still woefully behind its richer northern cousin, Venezuela.  In the early 1970s, Chile’s progress slowed to a crawl as its elite flirted with socialist policies. Once its government abandoned socialism and began economic reforms in the mid-1970s, the pace of progress sped up again, and soon Chile’s infants were safer than Venezuela’s. Today, Chile’s infant mortality rate is similar to that of the United States.

There is a lesson to be learned from these data points: economic policy matters. While Venezuela’s socialism has managed to kill more infants than a full-blown war in Syria, Chile’s incredible success story shows us that by implementing the right policies, humanity can make rapid progress and better protect the youngest, most vulnerable members of society. Today it is hard to believe that infants in Chile were once more likely to die within a year than their contemporaries in Venezuela and Syria. . . 

New Zealand is in no danger of following Venezuela’s downwards trajectory to complete disaster, but it is concerning that economic growth has slowed:

The economy appears to be slowing with today’s GDP figures showing economic growth in the past three months is the lowest in five years, National’s Finance spokesperson Amy Adams says.

“Economic growth in the past three months of 0.3 per cent doesn’t even compensate for population growth. Economic growth per person, which reflects population growth, actually declined in dollar terms over the past three months.

“Despite all the Government’s talk of wellbeing, that means New Zealanders are becoming worse off.

“While quarterly numbers can be volatile and need to be read with caution, these latest figures do suggest a general slowdown from the economy the Government inherited from National.

“These results will cause embarrassment to the Minister of Finance after he was too quick to boast about the previous quarter’s result, which now appears to be an outlier.

“Despite the economy slowing, the Labour-led Government is projected to take an extra $17.7 billion in tax from New Zealand families over the next four years than was projected under National. That amounts to $10,000 less in the back pockets of the average household.

The announcement of another increase to the minimum wage without a change to tax thresholds will mean even more tax taken.

Any families on low wages will be little if any better off because any gain in their pay will be offset by abatements to Working for Families top-ups. It is better to earn more and be less dependent on government support but that will be cold comfort to people who are struggling.

“National believes New Zealanders deserve to keep more of what they earn. Unlike the Labour-led Government, we know that as a country we can’t tax our way to prosperity.

“New Zealand needs sensible and consistent economic policies that promote growth and reward hard work, as well as wise spending of taxpayer money.” 

Venezuela is an extreme case but the lesson is clear – tax and spend economic policies are no substitute for ones which promote economic growth and lessen the burden of the state.

Good economic policy is the necessary foundation for sustainable social progress.


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