With unanimous support from parties across the House, climate change adaptation is back on the Government's agenda. Last month, the Finance and Expenditure Committee released the report of its findings from its inquiry into climate adaptation, which had the purpose of developing and recommending "high-level objectives and principles for the design of a climate change adaptation model for New Zealand to support the development of policy and legislation to address climate adaptation."
While it is positive that the latest inquiry was commenced with consensus-building in mind, significant differences across political divides remain. As such, vexed questions such as "who pays for adaptation?" are not significantly closer to being resolved than they were prior to the inquiry being commenced. Accordingly, there is substantial water to go under the bridge before New Zealand will have an effective and affordable framework for climate change adaptation in place. As such, we recommend that organisations keep a close eye on developments in this space and take the opportunity to engage with the legislative drafting process.
Below, we set out further background to the inquiry, the key recommendations in the Committee's report and where the Government's climate adaptation work programme is likely to go from here.
Background: what has happened up until now?
The Climate Change Commission is required to prepare a National Climate Change Risk Assessment at least once every six years, and the Minister of Climate Change must prepare a National Adaptation Plan (NAP) in response. New Zealand's first NAP was published in August 2022 and recommended reforming the resource management system. This recommendation aligned with the Government's programme to repeal the Resource Management Act 1991 and replace it with three new pieces of legislation: a Natural and Built Environment Act (NBE Act), a Spatial Planning Act (SP Act) and a Climate Adaptation Act.
The NBE Act and SP Act passed in August 2023. In the same month, the Environment Committee began an inquiry into climate adaptation that would inform the development of the third piece of legislation – the Climate Change Adaptation Bill. To assist the inquiry, the Ministry for the Environment published an issues paper on community-led retreat and adaptation funding, and a technical report by an Expert Working Group about the practical, legal, and financial aspects of implementing managed retreat.
In December 2023, the National-led Coalition Government fulfilled its commitments in the National-ACT and National-NZ First Coalition Agreements by repealing the SP Act and most of the provisions of the NBE Act, leaving the future of climate adaptation up in the air.
In April 2024, the Minister of Climate Change, Hon Simon Watts, requested that the Environment Committee conclude its inquiry into climate adaptation and instead proposed that the Finance and Expenditure Committee could undertake such an inquiry with “a more focused terms of reference”. The reasons given were that all parliamentary parties are represented on the Finance and Expenditure Committee, allowing for cross-party consensus, and because the Minister considered the Committee's responsibility to align "more closely" with "the focus of the adaptation framework."
The Committee's findings and recommendations
The Committee released its report on 1 October 2024, which recommended a range of objectives, principles and key aspects of system design for a New Zealand climate adaptation framework. This represents a more high-level output than contemplated by the previous Environment Committee inquiry.
In delivering its findings and recommendations, the Committee noted that the report's value, quality, and scope was "limited" by the short turnaround the inquiry was given. It indicated that cross-party consensus was hampered by "frequently divergent direction from elected members" which resulted in "a number of recommendations that remain vague, open to very different interpretations, and seem at times contradictory." This in turn led "some members …[to] worry about the report not answering some of the most challenging questions around, for example, the weighting given to allocative principles on ‘who pays’, and thus worry about its value in directing officials in legal drafting." The report noted that while the inquiry made important progress, negotiating and drafting the bill following the inquiry would require a lot more work.
Key system design recommendations in the Committee's report include:
- Climate adaptation legislation: There should be a comprehensive national framework for adaptation set out in legislation with clear mandates for central and local government, that sets out resourcing and financing arrangements and incentivises all actors to take action on adaptation. Cabinet materials suggest that the Coalition Government's adaptation framework will take a decentralised approach to decision-making, where local governments decide whether and how to protect assets based on local risks. They anticipate that central government's role will be establishing roles and responsibilities, and identifying and addressing specific instances of market failure in disaster response and recovery.
- Integration into resource management framework: Decisions about infrastructure, planning and development must consider climate adaptation, including for regional deals, the infrastructure pipeline, the Regional Infrastructure Fund and the RMA replacement legislation.
- Lead agency for climate adaptation: There should be a single lead agency for climate adaptation to support an all-of-government approach, interact with stakeholders and report on climate adaptation progress and the framework’s performance. This agency can be existing or new.
- The allocation of who will pay is still unclear: The Committee recommended allocating the costs of adaptation by applying a combination of "beneficiary pays, exacerbator pays, public pays, and ability-to-pay". The report also sets out an analysis by an independent specialist adviser of the impacts of seven scenarios with different cost allocations.
- Managed retreat: A key consideration of the framework should be ensuring there is adequate housing for people who need to relocate, including for those who do not own their own property. The Government should consider the recommendations of the Expert Working Group on Managed Retreat and investigate options to support property retreat. The report also recommended that the Government works alongside banks and insurance companies to investigate the idea of proactive financing instruments to help meet relocation costs.
- Improving climate and natural hazard data: The Government should develop an accessible public data commons for data on natural hazard and climate risk, and invest in research that seeks to improve climate and hazard data.
- Kaupapa Māori: The climate adaptation framework should involve bespoke arrangements for whenua Māori and recognise mātauranga Māori.
Where to from here?
The Committee has recommended that the report be debated in Parliament and the Government has until 16 January 2025 to respond. A bill supporting a climate adaptation framework was expected be introduced in early 2025, however, the outcome of the inquiry suggests a longer timeframe to develop legislation may be needed. The Committee noted that there will likely be a further opportunity for public submissions for any legislation arising from the inquiry.
We will continue to monitor progress on the adaptation framework and any related legislation.