An NZIER economist found 80 percent of new initiatives in the government's last Budget could hinder rather than help New Zealand meet its climate targets. Photo: RNZ // Angus Dreaver
An economist is calling for a new law requiring the next government to report the climate impacts of the Budget.
Economist Michael Bealing of independent consultancy NZIER found 80 percent of new initiatives in the government's last Budget could hinder rather than help New Zealand meeting its climate targets, which in turn could leave the country facing a higher bill for buying overseas carbon credits.
Bealing said we were falling behind France, Ireland, Nepal, Sweden and the UK when it came to reviewing the impacts of government spending on the environment.
He wanted future governments to have to reveal the climate impacts of their spending, even if the figures were not perfect. That would allow people to assess the trade-offs between social, economic and climate objectives - and track climate progress, he said.
Looking at May's Budget, NZIER put free public transport for children and investing in the EV charging network as favourable or very favourable to the climate, along with investing in local renewable energy schemes and a $451 million investment in scientific research centres to contribute to addressing climate change.
The analysis did not include the impact of spending up to $140m on reducing NZ Steel's emissions through the government's Decarbonising Industry Fund, because it was announced after the Budget.
Cyclone recovery spending on work such as rebuilding roads and rail after Cyclones Gabrielle and Hale was rated as neutral because it was necessary to increase climate resilience, even though it creates emissions in the short-term.
Negative or likely negative spending for the climate included the government's $71 billion infrastructure programme (which included a lot of spending on locking in what the report calls 'status quo' infrastructure, such as spending on roads). The report also found negative climate effects from building public housing for an additional 3000 people, though it noted the impact would be less if those homes were super insulated and energy-efficient.
"What we know is that economic activity usually generates new emissions, especially in the construction phase," Bealing said.
"As far as we can tell this (social housing) will create new emissions, but if we had more information about whether this is a shift from conventional housing to passive (super energy-efficient) housing or environmentally-friendly housing, over the life of the building it might actually be a reduction in emissions.
"We know this is being worked on within government, why don't they aggregate that information and report it up front and then we can know for sure?"
NZIER plans to review the impact of the Budget on climate change every year - but without better data, its first assessment was forced to rely on "judgement and experience", it said.
"It wasn't easy at all, and that's because the information you need to do, it is not readily at hand," Bealing said. "But it does exist within government. So we're trying to motivate a conversation about how you translate the information that is being developed in the underlying policies in a way that could be reported in the Budget."
"With government spending being equivalent to 42 percent of New Zealand's GDP in 2022, the Budget has a tremendous impact on New Zealand's emissions profile and ability to meet our international climate commitments," Bealing said.
"You can argue that the environment is priceless but if you don't put a price on it it ends up being worthless from an environmental economics point of view. So this is a part of a real push to make sure the environment is considered."
Failing to cut emissions could leave the government on the hook to buy more overseas carbon credits to fill the shortfall, he said, beyond the credits already expected to have to be purchased by 2030.
Treasury has put the cost of these in the range of $3-23b, even if New Zealand meets its current domestic carbon-cutting targets.