As calls are being made for New Zealand to make urgent and critical changes when it comes to managing climate change and natural hazards, there are questions around who will pay for these climate adaptation measures.
The conversation has emerged again after the Independent Reference Group (IRG - a group put together by the Ministry for the Environment shared its recommendations for the country’s adaptation framework on Wednesday.
This framework is something the Government has been working on to prepare people and sectors for natural hazards and other climate impacts.
In the document, the group recommended:
- New Zealanders need to have fair warning about the way natural hazards could impact them, so they can make informed decisions
- New Zealand should take the broadest interpretation of ‘beneficiary pays’ approach to funding the increased investment in risk reduction because of climate change
- People and markets should adjust over time to a changing climate
The recommendation includes putting the onus on people to know the risks that come with their properties and to make their own decisions.
‘Financial bomb for the country’
While Local Government New Zealand and Insurance Council New Zealand are supportive of the urgency behind the recommendations, both groups were wondering the same thing: who pays?
The report was quite silent in respect to where the costs will fall, Local Government New Zealand (LGNZ) vice president Campbell Barry says.
“We know that this will be a financial bomb for the country if we start to grapple with it properly and local government’s funding and financing options simply can’t handle that.”
It was frustrating that since the IRG was formed, there was still no clarity on where those costs will sit, Barry, who is also the mayor of Lower Hutt, says.
“If the expectation was that councils would be funding climate adaptation managed retreat buyouts, then you will very quickly see, in my mind, councils go bankrupt.”
"That’s how dire already the financial position of councils are with their debt caps and also the pressure current ratepayers are already seeing with rates increases in recent times to try and deal with things like backlogs of water infrastructure,” Barry says.
This report also comes days after discussions about capping rates with Cabinet set to look at ways to control rate rises later this year.
“If you put this type of additional responsibility on councils around buyouts and the likes, then you are really hamstringing them if you then also introduce a rates cap,” Barry says.
Speaking to RNZ, Insurance Council New Zealand’s chief executive Kris Faafoi said the question of who would actually pay for adaptation measures still needs to be answered.
“In the report itself, there was an expectation that councils will do a lot of the heavy lifting and where some communities might find it a challenge to be able to pay for some of the protections … then investment from the Crown might be necessary,” Faafoi told RNZ.
Going forward, Barry says LGNZ wants to sit down with the Government to talk about where the responsibilities sit and what cost-sharing mechanisms are available.
“I think it’s a good report but the number one question is still quite silent and still has uncertainty there so that does need to be addressed.”
‘The report is not government policy’
In a statement, Climate Change Minister Simon Watts said he welcomed the independent recommendations for how New Zealand can adapt to the impacts of climate change.
“The report is not government policy, however the Government is considering the group's recommendations, alongside the findings of last year's cross-party climate adaptation inquiry and other advice, as it works to put in place the building blocks for a national adaptation framework.”
The Government will review the recommendations and will announce decisions in due course, Watts said.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.