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Budget 2022 and climate change: Time to loosen the purse strings

Progress on climate change isn’t happening fast enough according to Grant Thornton New Zealand Partner, and Environment & Sustainability Leader, Michael Worth. He has identified three areas of spend in Budget 2022 that could go a long way towards future-proofing New Zealand’s environment for generations to come. Access the full article here.

“I think it’s time we started to get more innovative in our approach to Budgets. The Government is hamstrung by the Public
Finance Act; we need increased investment in programmes like Jobs for Nature; and we need to base the Budget on not only
financial metrics, but the resources we have left,” says Worth.

Public Finance Act reform

Worth says there’s a common perception among many Kiwis that a Government should balance its book like a household: earn more, spend less and run a surplus at all times. This approach is supported by the Public Finance Act, which sets out a framework for how the Government can borrow money or spend public funds.

“Given the level of threat climate change poses, what’s required is not simply more room to manoeuvre within the PFA, but to remove it. Then we can clearly and confidently use the power of the Government’s balance sheet to address this very real crisis to ensure we have a future.

“Public debt shouldn’t be as frightening as what we’re facing environmentally if we fail to act. The real debt is what we owe to the next generation. What good is running a cash surplus if our children can’t rely on quality air, clean water and a healthy place to live”, says Worth.

More Jobs for Nature

Finance Minister, Grant Robertson has indicated initiatives in this year’s Budget will be pivotal as the country moves towards a high-wage, low emissions economy. But this will need greater environmental expertise and more low carbon jobs, says Worth.

“The Government’s COVID recovery strategy includes the $1.2 billion Jobs for Nature programme which has been designed to fund 11,000 nature-based jobs across Aotearoa; it has already created 5,700 jobs for 360 projects. It has also paid for $3.2 million plants to be planted, pest control on over 500,000 hectares and maintenance on nearly 600km of tracks.

“Imagine the effect we could have on Aotearoa New Zealand’s degraded environment with a significant boost to this programme in Budget 2022. Our interior environments could also benefit if we expanded the programme to fund work on making homes more efficient. According to the International Energy Agency, boosting buildings’ energy-efficiency work creates more jobs per million spend than any other sustainable initiative, and is the highest job creator of the sustainability initiatives they assessed”, says Worth.

Budget for carbon, not just cash

When it comes to what we’re actually Budgeting, Worth asks, “Rather than just money - a proxy for resource use - how about we base the Budget on not only financial metrics, but the actual resources we have?

“The idea of an energy economy has been gaining ground, partly because energy has far more intrinsic value than money. If you were stuck on a desert island, you’d certainly rather have a generator than a pile of cash.”

“Carbon is one currency in the energy economy, and we have set targets for reducing our carbon use and emissions. What if we established how much carbon New Zealand had left to burn? If we agreed Aotearoa New Zealand’s carbon Budget and capped it, it would throw into very stark relief the best use for this scarce resource.

There are ways we could measure and allocate carbon, such as Tradeable Energy Quotas, which could be allocated to individuals. Those who use less carbon than they’re allotted could sell the excess to other users, and manage the system through an online platform. The total number of units available to New Zealand goes down year by year and could be set by an independent body, like the Climate Change Commission, which would set the units to maintain adherence to our emissions targets.”

Access Michael Worth’s full article here.

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