Budget 2022: Time for action
Multi-year funding to accelerate progress
It’s no surprise Budget 2022 includes major funding to address climate change. The Government has signalled for some time that the country must take action to address the climate crisis. Today’s announcements include multi-year funding to enable a raft of climate policies and strategies.
- Allocated $2.9 billion across the forecast period for the Climate Emergency Response Fund of climate investments for energy security and lower costs for New Zealanders.
- This is in addition to pre-commitments of $840 million for international climate finance under the Paris Agreement, and $25 million for the Government Investment in Decarbonising Industry Fund.
- Establishes several key work programmes and investments, in particular within transport ($1.3 billion), energy (total $1 billion over seven years), and agriculture and forestry (total $710 million over four years).
These follow previous Government announcements including the 9 May 2022 release of Aotearoa New Zealand’s first three Emissions Budgets. Established in the Zero Carbon Act, this new multi-year budget approach sets out the total emissions Aotearoa New Zealand must cut over the next 14 years and dictates that these budgets must be met through domestic activity alone. This was followed by the 16 May 2022 release of Aotearoa New Zealand’s first Emission Reduction Plan (ERP) which sets out how the Government plans to deliver on the first emissions budget.
Budget one (2022–2025) caps the amount of carbon dioxide equivalent greenhouse gases to 290 megatons over the three years. This is about two megatons per year less than the five-year average from 2017 to 2021. The ERP includes $2.9 billion of spending from the Climate Emergency Response Fund, funded through the Emissions Trading Scheme.
Spending initiatives in Budget 2022 include:
- Transport: $569 million towards a ‘Scrap and Replace’ scheme for low to middle income families to help increase the electric vehicle (EV) light fleet. The scheme allows families to spend on an EV, an e-bike or public transport vouchers. $375 million to fund activities to achieve mode-shift and reduce vehicle kilometres travelled.
- Agriculture and forestry: $339 million to accelerate technology and establish a Centre for Climate Action on Agriculture Emissions. A total of $256 million to help forestry establish carbon sinks and storage.
- Energy: $653 million to increase funding to reduce emissions. The funding is to support businesses to improve energy productivity, bring forward fuel-switching projects, and reduce exposure to carbon price risk.
- Equitable transition for Māori: $31 million funding to establish a platform to strengthen the Crown/Māori partnership and support a holistic approach to climate change that supports an equitable transition for Māori.
The ERP also sets up a range of new advisory groups including a Clean Car Sector Leadership Group, a Centre for Climate Action on Agricultural Emissions and a platform for Māori Climate Action.
Time for action
Many reports point to the speed at which climate change is progressing and the urgent need to act. Following COP26, almost 200 nations committed to increased climate action. Locally, a recent report points to the increased speed of sea level rise in some parts of New Zealand. Also, policy announcements such as those contained in the (draft) National Adaption Plan and Emissions Reduction Plan signal significant shifts in that direction.
Change on this scale requires major investment to deliver desired outcomes. Whilst Budget 2022 identifies priorities and puts money on the table to back climate action, strong policy, direction and commitment to climate action is needed to support and guide our economy to ensure Aotearoa New Zealand remains attractive to international investors. Together with recently released policy documents, Budget 2022 signals the shift to action, which will require all community, business, and the public sector to engage.
How is Deloitte supporting climate action?
We have released several reports that reiterate that the time to act is now, and that we have a lot to gain from effective climate action:
- Our Global CXO Survey asked over 2,000 global leaders questions on climate change. Almost all respondents said their companies had been affected by climate change, however there is still a disconnect between ambitions and actions.
- Our Asia Pacific Turning Point report brings optimism to the table, showing how effective climate action could significantly boost our gross domestic product (GDP).
Budget 2022 has announced a record level of spending on climate change. Coupled with emission budgets, policy, and global alignment to tackle climate change, Budget 2022 marks the beginning of a new phase of climate action. Moving out of direction setting, it is time for the Government to use the funds wisely and ‘get things done’ in this next phase of Aotearoa New Zealand's climate action.