June 04, 2024

Budget 2024 poses a mixed bag for environmental initiatives

While not quite the doom and gloom some may have feared, the news is hardly positive

The rhetoric preceding the 2024 budget was abundantly clear; climate change and the environment were not the top spending priorities for the Government.

While not quite austerity, Budget 2024 presents few environmental wins. Funding previously targeted at specific environmental initiatives has been opened to fund a wider range of environmental initiatives. However, numerous existing climate and environmental programmes have been affected by the Government’s cost-savings measures.

The funding restrictions for the Climate Emergency Response Fund (CERF) will be opened to consider wider initiatives

The CERF is where the substantial revenues ($2.7 billion in Budget 2023) from the Emissions Trading Scheme are deposited. Previously, CERF funding has been restricted to programmes that met specific environmental criteria. Specifically, particular emissions reduction and climate adaptation programmes. These restrictions have now been removed, and a wider range of climate adaptation and/or emissions reduction initiatives can apply to be funded via the CERF through the normal budget process.

The Waste Disposal Levy, a tax on the volumes of waste deposited to a landfill, is the next policy earmarked for change. In its current state the revenue, split 50/50 between central and territorial government, can only be spent on waste minimisation projects. For example, partially funding kerbside green waste collection. The scope of programmes eligible for funding has increased. The waste levy revenue can now be used to fund the costs of cleaning up contaminated sites vulnerable to climate change, or after weather events. This will undoubtably be a hand up for local councils facing the financial pressures of rebuilding after extreme weather events.

The National Resilience Fund (NRF) is being closed

The previous government’s $6 billion in funding from 2023 to 2026 for the NRF will cease to exist. The purpose of the NRF was to build back better, support community resilience, and provide mitigation from extreme weather events. The closing of the fund is expected to return an average of $400 million per annum back to the Government’s coffers.

However, Budget 2024 does redirect a proportion of the NRF back into climate resilient infrastructure projects. North Island Weather Events – Road Response and Recovery is getting $330 million in new funding over the 2023 to 2025 period. Severe Weather Response, Readiness, Resilience, and Recovery is getting $23 million in new funding until 2028.

Some funding for climate change mitigation and adaptation will be channelled through the new $1.2 billion Regional Infrastructure Fund. This Fund will provide resources to regional projects that support economic growth and resilience for climate events. While $1.2 billion is a small amount, compared to $6 billion, it does nonetheless show a sustained commitment to increase New Zealand's infrastructure resilience to climate-related risks.

What is happening specifically to the proportion of money spent on environmental and climate initiatives?

Although there has not been a significant reduction in the total amount of spending, there has been a change in focus in where the spending is directed.

Source: BERL Analysis

The baseline savings targets required of most government departments has impacted numerous initiatives

Under the environmental section of the budget, seven government initiatives will have targeted funding reductions. One new initiative has been announced. Surprisingly, the Climate Change Commission will be scaled back, with cuts to the tune of $4.2 million from 2025 onwards. In addition, funding for environmental evidence and data is facing targeted cuts of $9.6 million by 2028.

The savings are being redirected to the Government’s replacement of the Resource Management Act (RMA). This is projected to cost $92.2 million by 2028. While the RMA has been criticised for not meeting its objectives, the jury is out regarding whether this additional spending will produce acceptable, and needed, legislative changes.

In summary, the budget poses a mixed bag for environment and climate initiatives. While many would like to see the spending on the environment increase, the cuts proposed are not as drastic as the rhetoric might suggest. It seems Budget 2024 was more focused on the reprioritisation of environmental spending, rather than the outright neglect of funding for environmental initiatives.