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Farmers to Pay for Emissions: Too Little, Too Late

The Government has proposed that, in 2025, farmers start paying for 5% of their climate emissions. It estimates that this will cost about 1c per kilo of milk solids, or 3c per kilo of sheep meat. 

While some farming groups are bleating in protest, the majority seem to be grudgingly on board. Of course, the fact that farmers are acquiescing has sparked claims from environmental groups that, while this deal is a step forward, it still amounts to a backdown. National is playing a true opposition role – including to itself – by claiming that it is both a ‘tax grab’ and a ‘backdown’

Is it possible to do better for the environment without stuffing the economy? This is an incredibly complex issue with many moving parts which this blog sets out. Yesterday’s announcement gives rise to as many questions as answers. The main question is: what are we really trying to achieve with our land-based industries? 

The Interim Climate Change Committee Report

In general, the Government looks to have accepted the core of the proposal from the Interim Climate Change Committee (ICCC) report. It estimates that it will take five years to develop the necessary infrastructure to bring farms into the Emissions Trading Scheme (ETS), through a simplified levy and rebate scheme. That is why the Government has set the date for 2025. 

The ICCC also recommended bringing agriculture into the ETS sooner, at a processor level. This would get the industry to start paying, but wouldn’t enable farmers to reduce emissions at farm level to the same extent. For that reason, farmers have labelled this interim measure a “tax” and the Government seems to have put it in the too-hard basket.

Should Farmers Pay for More of their Emissions? 

Absolutely. 5% is a total cop out. And the Government’s proposal gives no indication as to when this favourable treatment would end. The cost of other free allocation to heavy emitters is already a massive challenge for reducing our emissions. Effectively, this puts all the burden of reducing emissions on everyday Kiwis. 

Of course, farmers will pay more as the carbon price rises, but large price rises are unlikely in the near future. There is currently a price cap in place and when it is removed, New Zealand has lots of marginal land available for planting trees. 

On the other hand, current carbon accounting methods are also wrong for farming and need sorting out. If this was done, it would reduce the burden on farmers. Let’s look at these issues in more detail. 

What Should Count? 

The ICCC report signalled that there are still big questions to be answered about what to include in the ETS and how. Here are a few examples:

  • Treating methane fairly - given it is a short-lived gas - is a massive issue. Methane emissions need to be reduced, but not to zero. The current approach overestimates methane’s impact on warming. 
  • The Parliamentary Commissioner for the Environment has suggested using trees only to offset agricultural emissions (not fossil fuel emissions). This would keep the cost of mitigation lower for farmers and focus on getting fossil fuel use to zero as soon as possible. 
  • Farmers are currently not rewarded for looking after pre-1990 forests. As a result, they have no incentive to keep stock out. 
  • Nor are farmers currently rewarded for riparian planting, which is too small to count under the ETS. 
  • Wetlands are great carbon sinks and improve water quality, but aren’t currently included in the ETS either. 

Is It Worth It? 

So, is it worth setting up a very expensive and complex scheme to get farmers to pay for 5% of their emissions? Especially when the pricing may not cover all the aspects of emissions we’re worried about? 

The Government was going to ask farmers to take action on water quality and biodiversity soon – will they still be doing that as well? Hopefully announcements on fresh water changes due to come out soon will tell us. It would be a shame if this timid climate announcement comes at the expense of progress on water quality. 

After reading the ICCC report, it struck me that it would be a lot simpler to just include synthetic fertiliser companies in the ETS with no free allocation. This could start right now and would have a similar impact to including the whole of agriculture and giving them 95% free allocation. Of course, you could argue that the planned changes create a system we can use later – but with no plans to reduce the 95% free allocation, it just looks like more paperwork. 

Overall, it seems that everyone has gotten bogged down in the details of how to implement the ETS and can’t see the wood for the trees. 

The question is: what do we want farmers to actually do? How do we want them to use the land differently? That is the conversation that seems to be missing completely – and will be the topic of a future blog. 

 

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Independent Report Pours Cold Water on Government Renewable Electricity Target

The Interim Climate Change Committee (ICCC) has published its first reports on agriculture and electricity generation. I will address the agriculture report in more detail tomorrow. 

The main takeaway from the electricity report is that the Labour-Green goal of 100% renewable electricity by 2035 could push up power prices by 14 to 39%, increase the risk of blackouts, and have relatively little impact on reducing emissions. Instead, the report recommends that the Government focus on reducing emissions from transport. 

Despite this well-researched advice, the Government intends to stick to its original target. This begs the question, why did it bother setting up an independent body if it won’t listen to its advice? 

The Interim Climate Change Committee

As part of the Zero Carbon Bill, the Government will establish an independent Climate Change Commission to advise on how to achieve its emission reduction targets. It has taken a long time to put the Bill together and it is still going through Parliament (currently at select committee stage). 

In the meantime, the Government set up the ICCC to provide some more short-term advice. The committee was asked to consider the goal of 100% renewable electricity by 2035 and how to reduce emissions from agriculture. 

100% Renewable Electricity

The goal of 100% renewable electricity was part of the Labour-Green Confidence and Supply Agreement after the 2017 election. The ICCC was asked to work out how to do it.

The committee’s models found that it would be very expensive to achieve. Power bills would rise by between 14 to 39% and the risk of blackouts would also increase. 

The report suggests that, without doing much differently to now, we will reach 93% renewable electricity by 2035 and electricity prices would actually be lower than they are now. However, beyond this threshold, higher levels of renewable electricity would get progressively more expensive – especially in the jump from 99 to 100%. 

The main reason for this extra cost is that there are peaks in our electricity demand that renewable electricity struggles to deal with. If we use only renewables to meet all our electricity demand, we would have to build a lot more electricity generation or battery storage to deal with peaks. We also occasionally have a ‘dry year’ problem, when our hydro lakes run low and struggle to meet demand. 

Of course, as we focus on this problem, someone clever might come up with new technology to make the transition easier. Better ways of storing power and more accurately matching electricity demand with supply are certainly possible solutions. But we don’t have them yet – or at least they aren’t cheap. And in the meantime, there are far more cost-effective ways to reduce our emissions, by focussing on transport and process heat.  

Returns Are Higher Elsewhere

Instead of worrying about the 100% renewable target, the ICCC report found that we should instead focus on reducing emissions from transport and process heat. Policies such as the recently announced fee-bate and improved fuel efficiency are positive steps in this direction. (This is clearly why the ICCC report was delayed – so that the Government’s announcement on transport could take the sting out of the bad news about the renewable energy target.) Nonetheless, despite all this excellent advice, it looks like the Government is sticking to its goal of 100% renewable energy by 2035. Minister Woods has claimed that the Government can focus on both electricity and transport. This position may be intended to save political face, but is blind to the relative costs of each sector. 

While the Government is making some progress on transport, the challenge with process heat is greater. We need to immediately stop building any new factories that use coal to generate heat, because these investments will last for 40 years. This will require making some changes to our electricity system, but also taking on companies like Fonterra – who are not in a financial position for more bad news.


Three Ways to Fix the Zero Carbon Bill

The Zero Carbon Bill is currently going through the select committee process, which gives you another chance to offer your feedback. The Zero Carbon Bill is an essential piece of legislation in the transition to a low carbon economy, but recent evidence suggests that its goals could be better. 

The Bill 

The Zero Carbon Bill is a long-awaited piece of legislation to pave the way to a low-emission economy in line with the Paris Agreement. Of course, we don’t know all the details about how that transition will happen. Instead, the bill sets some emission-reduction targets and establishes a Climate Commission to advise the government of the day on the best way to meet those targets. Right now, the targets are the important bit, so we’ve got to get them right. 

FIX 1: Zero Fossil Fuel Target

As it stands, the main goal in the Zero Carbon Bill is net zero emissions by 2050. The key word here is “net”. It means that we may still be emitting greenhouse gases in 2050, but that is okay so long as we are doing other things that soak them up. And the main way we have of doing this is planting more trees. 

That all sounds pretty reasonable so far. Some quibble about how quickly we should act, for example School Strike for Climate wants us to get to net zero by 2040, and Extinction Rebellion by 2025. 

However, some people look at the issue really differently and question whether the “net” bit is a good idea at all. In other words, should we plant trees to offset our emissions?  

The real enemy in the long term is carbon dioxide. This gas is created by burning fossil fuels and is causing most of the warming in the world today. Carbon dioxide lasts a long time in the atmosphere – around 1,000 years. 

Currently, the most reliable means of soaking up carbon dioxide we have is planting trees. Approaches like seaweed farming, building up soil carbon, and creating wetlands are all possible solutions in the future, but aren’t proven yet. 

While trees do soak up carbon, they can only soak up so much. Once mature, forests reach a steady state. And that means if we want to keep emitting fossil fuels, we need to plant up more and more land. Eventually this will squeeze other productive uses of land. 

We also don’t know how long trees will keep that carbon locked up. Plantation forests are deliberately cut down after 30 years. Even “permanent” native forest is prone to disease and fire. It is somewhat risky to rely on them as a “permanent” carbon sink. 

Tree planting also presents a problem in a practical sense. New Zealand has so much marginal land that offsets from planting trees will keep the carbon price low – too low for businesses to take real action to reduce their fossil fuel use. In other words, we could get to 2050 having done very little to lower our emissions and merely planted trees instead. This would leave us still facing an enormous challenge of weaning our economy off fossil fuels. 

No other country in the world allows unlimited levels of tree planting as an offset for burning fossil fuels, because they know we must get fossil fuel use to zero. So why not have that as the key target? Stop messing around with this “net” zero carbon idea entirely and truly work towards being a zero carbon country. The timeframe is up for debate, but this should definitely be the target. 

FIX 2: Plant Trees but Only to Offset Agricultural Emissions

New Zealand is unique among developed nations in having such a large proportion of our emissions from agriculture. As a result, no other developed country talks about it as much as we do. 

New Zealand definitely needs to take action on agricultural emissions. We need to stabilise and reduce them, particularly methane. However, we don’t need to get them to zero. 

So what should farmers (and government) be doing? The first priority should be sorting out fresh water quality, particularly in places like Canterbury. This is a far greater challenge than reducing agricultural emissions and will generally lower emissions anyway as farmers farm less intensively. 

Beyond that, Parliamentary Commissioner for the Environment Simon Upton suggests that agriculture is the appropriate place to use trees as offsets. After all, plantation forests soak up carbon for about 30 years - a similar time to the life of methane emissions in the atmosphere. Growing native forest also has a similar profile to nitrous emissions at 100-200 years. What’s more, agriculture and trees compete for the same land space. 

This naturally raises questions of fairness, whether farmers are “doing their bit”, and how emissions are accounted for internationally. I would say the world is looking to New Zealand to lead on this. 

FIX 3: Look for Win-Wins 

There are lots of examples where reducing emissions can have other benefits for people. In these side benefits are a massive part of what can make a low emissions economy appeal to people. Our health for example hugely benefits from better insulation and from greater use of active transport. The Zero Carbon Bill should recognise these win wins and encourage policies that achieve them. 

Another big example of potential win wins that needs thinking about is the area between adaptation and reducing emissions. The sad truth is that, based on other countries’ current promises, we are headed for a world that is at least 3 degrees warmer than pre-industrial levels. That is above the 2 degree upper limit in the Paris Agreement and almost double the ideal goal of 1.5 degrees (which would prevent sea level rise that would threaten many low-lying countries, including the Pacific Islands). 

So what actions should we take? Surely we should look for win-wins that both reduce emissions and help us adapt to a warmer world. Planting up erosion-prone land with native trees is a clear starter, as there will be more storms in the future. Energy security could be a massive challenge and will largely be resolved by investing in renewable energy. And of course, improving energy efficiency is always a massive issue for both the economy and the environment. 

The Zero Carbon Act should make it clear that these win-wins are action priorities. Not only will they reduce emissions, but also help prepare us for the potential challenges ahead. 

EXTRA FOR EXPERTS

Some other weaknesses of the Bill have been canvassed by others. In particular the Bill allows Governments to drag their heels on action and claim that we can do more later on, closer to 2050. This is just putting the problem in the lap of future generations. 

Also the Bill states that the Climate Change Commission will be independent except when it comes to the unit supply setting of the Emissions Trading Scheme. This seems bizarre - the Commission is supposed to provide carbon budgets and recommend the best way to achieve those carbon budgets. Yet when it comes to the biggest tool - the Emissions Trading Scheme - they will have their hands tied behind their back. It’s bizarre, the clause must have been added as a condition of support from someone who isn’t really serious about taking action (probably National or NZ First). 

 

 


Westland Milk is Gone, Will Fonterra Be Next?

Outspoken economist and ex-public servant Peter Fraser has long been a critic of how Fonterra was set up. With the recent sale of Westland Milk to Chinese buyer Yili, Fraser reckons that Fonterra is on the same track

The Argument

In brief, Fraser argues that Fonterra has been overpaying for milk right from the start. In fact, he thinks this was the true intention of the farmers who lobbied for it. The lobby asserted that Fonterra had the potential for value added and could become New Zealand’s Nokia. 

But this mystical value added has not materialised. In Fraser’s view, this was deliberate. Fonterra has underinvested in value added at the expense of paying out to farmers, ensuring an artificially high milk price. And since Fonterra sets the milk price for the whole country, it has effectively stopped all companies from adding value. 

This high milk price has been capitalised into farm values, which farmers love because it leads to… untaxed capital gain! It has also seen large swathes of the country converted to dairy (such as the McKenzie country), most of which has been an environmental disaster and could end up an economic one, too. 

But now, Fonterra’s share price is tanking: falling from $6 when it launched to well below $4 (and still dropping). This is because the dividend has been so poor, since all the money has been propping up the milk payout. 

Farmers don’t care about this because their payout is the milk price, plus the dividend from shares. But shareholders have been leaving in droves. 

So where to now? 

Fonterra needs to start retaining more of the milk payout to shore up its balance sheet and (ideally) make those long-awaited investments in value added. 

However, Fraser argues that Fonterra won’t be able to do this, because the payout is set by a formula that is biased towards the farmers. Instead, he predicts that the payout will stay high, Fonterra will keep selling down assets, and the share price will keep falling. 

And there is no problem if it falls to zero: Fonterra is a cooperative. But if farmers start leaving the cooperative for better returns elsewhere (i.e. companies that do have some value added), then Fonterra will be left with factories it can’t use. That would spell certain doom. Either the Government (or the Super Fund) would need to step in, or it would end up being sold overseas like Westland. 

The Red Herrings

The recent Dairy Industry Restructuring Act (DIRA) review concluded that the big issue facing Fonterra was its ability to control new farmers joining the cooperative. So Fonterra can now disqualify suppliers for poor environmental standards, which environmentalists have hailed as a win. Of course, it’s unlikely that it will crack down on any but the worst offenders. 

But Fraser argues that Fonterra was always able to refuse new farms setting up in distant places like the McKenzie Country and yet has been encouraging greater milk production volume for years. His view of the recent reform is more sinister: that Fonterra wants to be able to refuse new suppliers to punish farmers who stop supplying the cooperative by telling them they can never come back. This, they hope, will prevent the death spiral described above. 

What is Needed?

The base milk price (BMP) is currently set by Fonterra, in line with a process outlined in the Milk Price Manual – also authored by Fonterra. This process is monitored by ComCom, which can only declare whether or not it is consistent with the legislative objectives. ComCom can signal problems, but doesn’t have the power to do anything. It’s transparent – but also a ringside seat to a bank robbery.

Fraser thinks the Government needs to rethink the DIRA review. It should cancel the silly changes to regulated milk and open entry, rename the BMP ‘the hypothetical industry benchmark price’ (HIBP), and have it set independently. Fonterra would be able to set its own farm gate price at or below the HIBP, like all other providers, and that should allow it to retain another 20–24 cents.

Fraser also sets Fonterra some homework:

  1. Take at least 50 cents off this season’s milk price to retire debt.
  2. Announce revised gearing (i.e. debt reduction) targets for the coming 4 years.
  3. State that the 2019/20 dividend will be no less than 20 cents.

This would not make Fonterra great, but it would enable it to survive and others to get on with creating value. 

No matter how things pan out, some farmers who are banking on the milk price staying high  (particularly those who recently set up in the McKenzie Country) look to be in for a rude shock.

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The Housing Crisis: Is it Supply, Demand, or Both?

Experts tend to disagree on whether our housing crisis is caused by demand or supply. There are often political reasons for this disagreement, depending on what sort of solutions you want to see implemented. However, nobody can deny that the tax system is distorting our housing market. 

How that plays out depends on your assumptions and the way you see the world. In short, either the tax system is causing high house prices or it is threatening vege growers on the Bombay Hills. Maybe even both. 

The Core of the Problem

It all starts with our tax system and the Tax Working Group set this out very clearly. As you can see from the graph below, property is taxed vastly differently from other assets. However, the biggest tax break is not for investment properties, as most people would like to believe, but the family home itself. Labour excluding the family home from its Capital Gains Tax would not have fixed the core of the problem. 

We have known about this tax break since the tax system was reformed in the 1980s. In fact, it was discussed in a 1989 “Consultative Document on the Taxation of Income from Capital”. Page 79 sets out the facts that no economist would disagree with. Essentially, when a person lives in a house, they get a non-monetary benefit from it (i.e. shelter and other nice stuff). Whereas if a person pays rent, they need to use money out of their after-tax income. An owner-occupier is effectively paying themselves rent, but because no money changes hands, they don’t have to pay the tax. 

This means that the best place for anyone to put their money is into their own house. This sort of tax advantage for housing isn’t unusual, particularly in Anglo countries. However, Andrew Coleman describes New Zealand’s system as the “most distortionary tax policy towards housing in the OECD”. As a result, we have the highest rates of investment in housing compared to other assets in the world. And the rest of our economy suffers from lower rates of investment as a result. 

The Demand Response

No economist or expert would disagree with the analysis so far. What the tax system does and has done since the 1980s is encourage us to put more of our money into property than we normally would. In other words, it artificially increases Kiwis’ demand to invest in property. If you don’t believe me, the Treasury report from 1989 said as much. We’ve known about the problem for a long time, as long as it has existed. 

So when experts talk about the housing crisis and the problem with the “demand side”, this is what they mean. Investors stoke the demand even higher, but that is only because they know we all want to own our own home. And yes, population growth also adds to the demand side problem. 

In terms of the housing market, the tax system effectively increases the demand for housing and land much in the same way as a population increase. 

However, not all experts see this tax distortion as a problem in itself. What some consider more important is how the market reacts in terms of house prices. And they think building of houses depends on the response of supply. 

The Supply Response

When demand increases and supply can’t respond, prices rise. This is usually what experts mean by a “supply side” problem. And given that we have had some of the biggest increases in house prices in the world in recent decades, New Zealand clearly exhibits symptoms of this problem. 

Some experts suggest removing the red tape around housing to ensure that we get a perfect (or at least better) supply response.

What would a supply response look like? Remember that even if we get a perfect supply response, the tax system still drives increased demand. People will still overinvest in housing. This would lead us to buy bigger properties, build bigger homes, and pay significantly more for land when there is traffic congestion. And the fact is that we already see these responses in the New Zealand property market, as well as higher house prices. 

Here are a few facts: according to Andrew Coleman “the average size of newly constructed houses has increased faster than in Australia or the United States and is amongst the largest in the world.” More than a third of 3 bedroom homes and half of 4 bedroom homes in Auckland have 2 or more spare bedrooms. Given the levels of homelessness we face, this is a stark reminder of the growing gap between the rich (property owners) and poor (renters and homeless). 

We can’t merely blame the lack of a supply response for the problems we face. The demand side, including our tax system, is also contributing.  

Be Careful What You Wish For  

If we did manage to reform housing supply without resolving the demand side issue, it is very likely that house prices would fall. This should be no surprise – supply would increase and some rich people would lose their views as a result of their neighbour subdividing. 

However, it is likely that Kiwis would continue to over-invest in housing thanks to the tax status of property. And businesses would continue to suffer as a result. 

What would the housing supply look like if supply were freed up? Chances are we would continue to build far bigger homes than we need and have lots of spare bedrooms. We would continue to tie up excess investment in our housing stock. 

Most worrying of all are land wastage and urban sprawl. Vege growers on the Bombay Hills are already at risk of Auckland’s creeping concrete. Freeing up supply would no doubt finish them off. 

And what about the associated costs of sprawl? More cars and everyone spending more time in traffic. Congestion charges are needed to counteract that risk. Cities like Houston in Texas are held up as champions of freer housing supply. Yes their houses are cheaper, but what many people save in rent or mortgage, they end up paying in transport. And finally, compact cities have a far smaller carbon footprint. 

This much is clear: both housing demand and supply need to be fixed for New Zealand to have a sustainable economy, society and environment.

 

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We Need to Talk about Immigration

Our Coalition Government was elected on a clear platform of reducing immigration, but so far changes have been minor. There seems to be little appetite to deliver the reforms they were elected on, or even to discuss the issue publicly. Racial issues are understandably incredibly sensitive at the moment, given the recent tragedy in Christchurch. Most New Zealanders are keen to help on this count. However this should not overshadow the need to continue to debate immigration in dispassionate, non-racial terms. To do so would mean ignoring many important issues and only push a valid discussion underground. 

Promises Promises

Labour claimed that its policies would reduce immigration to relieve the pressure on our ailing infrastructure. They were always vague on whether their target was a reduction in 20-30,000 per year or as a one off. Its coalition partner New Zealand First promised to slash numbers to as little as 10,000 per year. 

So far, immigration numbers have indeed fallen, but not by much. In fact, apart from student reforms, the drop in immigration seems largely due to the business cycle. 

The Labour/NZ First coalition has tightened some of the loopholes around student visas. This stopped the worst rorts of the system that were happening under National, which essentially saw dodgy training providers dangling the carrot of NZ residency to boost enrolments. Clearly this was not the way to run our education exports or our immigration policy and needed sorting out. 

Beyond that, reform has been slow to arrive and contradictory in its intentions. 

Confusion Over Government Policy

Economic commentator Michael Reddell points out that the Government seems to have been making policy changes with as little publicity as possible. Impending changes seem to hint at further reductions, but the devil is in the details on this issue and so far there is no detail. 

Finance Minister Grant Robertson seems to have other ideas. He is downplaying the possibility of further reductions in immigration. He thinks Treasury’s predictions of falling net migration are overcooked, which seems to hint there will be no further substantial policy changes. Perhaps he realises that reducing immigration would slash growth in the tax take and the money available for future budgets. This is a bizarre incentive for governments to continue immigration regardless of whether it benefits the country long term. 

Even New Zealand First has tried to spin continued levels of immigration as a win for the regions. Apparently, the line is that the Government is still allowing immigration, but is working to ensure new migrants go where they are most needed. Sadly, overseas examples tend to show that such approaches fail – people eventually move to the cities regardless. 

The Opportunities Party position is clear - economic immigration (i.e. not including refugees and families) should only be allowed where it benefits the country as a whole. 

The Christchurch Tragedy is No Excuse for Silence

The public could be forgiven for being confused. What is the Coalition Government’s policy on immigration exactly? Whatever it is they should be open and transparent about it.

The Christchurch tragedy has rightly started a debate about racism in Aotearoa New Zealand. However, it should not prevent us from discussing immigration entirely. Immigration is a highly charged topic for many people. Some of the reasons for this passion are valid, and some are not. Racism for example should clearly not be a factor in the public debate. However, since Helen Clark came to power we have had the highest per capita planned inflow of permanent non-citizen migrants in the OECD, which has placed unprecedented pressure on our housing and infrastructure. That is one of many valid issues that should be up for debate. 

I am in no way blaming migrants themselves for the problem. The fault is ours as hosts. It’s a bit like inviting 8 people around for dinner and only cooking for 6. 

We simply haven’t invested in the roads, sewage and housing required to service the higher population. It is risky to invite more people into the country if we are still trying to catch up on the infrastructure deficit from the last influx, unless of course they can help us build that infrastructure. 

In coming blogs, we will set out which issues urgently need to be talked about. The important point for now is that this conversation must not be taboo. 

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Conscience Voting is a Sham and Should End

The End of Life Choice Bill is being treated by Labour and National as a conscience vote. New Zealand First, the Green Party and ACT apparently intend to back it, but Labour and National will leave it to the consciences of their individual MPs.

Simon Bridges had the gall to call out NZ First and Greens for voting along party lines, when it is the conscience vote that is the real cop out here. I have absolutely no faith that the consciences of those elected representatives will represent the will of the public. This is because so many of their consciences are directed by their personal religious beliefs.

Now don’t get me wrong, religion is fine – as long as you keep it to yourself. There is no place for using Parliament as a platform to push any religion onto other people. That is why, in New Zealand, we have a clear separation of church and state.  

MPs are supposed to represent the people. They are not there to listen to their own inner voices (or those of their preacher), which may be of completely out of step with the moral decisions desired by the public.

There are Far Better Ways To Make a Decision

Conscience voting may have made sense in the 20th century. Back then, it was expensive to find out what people think or involve them in decision-making. But things have come a long way since then.

Nowadays, we have plenty of well-established ways of gauging public opinion. All political parties poll heavily. We already have a referendum on cannabis in the offing, we could even add the end of life issue to that poll (which is the NZ First position).

The Opportunities Party thinks there are even better ways to resolve this question. We would set up a Citizen’s Assembly, run by a representative group of citizens who are exposed to all the expert arguments and make a call. This overcomes the problem with referenda (and arguably Parliament generally) where so many people vote about something they aren’t informed on.

Putting Beliefs Aside and Representing the People

National Party MPs in particular seem to be most at risk of voting this Bill down at the second reading, despite its popularity with the public.

Yes, there are still some problems in the legislation, but even David Seymour recognises them and plans to make the required changes after the Second Reading.

Voting down this Bill would be a pretty cynical move by National’s more conservative MPs. Most shocking is that some MPs, such as Paulo Garcia, Maggie Barry, and Simon O’Connor appear to openly reject the Bill on religious grounds. Do they represent their constituents or their church? To her credit, Judith Collins opposed the Bill on the first reading but has apparently since consulted her electorate (though it isn’t clear how).  

MPs should put their personal beliefs aside and represent the people. A great non-political example of this is Melinda Gates who has put aside her Catholic beliefs on contraception to deliver much-needed solutions for women in Africa. It would be great to have more leaders like this.


Why Christchurch Should NOT Become the Next Barcelona

Newsroom’s David Williams is cataloguing the growing concerns in Canterbury about the safety of their drinking water. So far the focus is on private wells, but if Cantabrians looked to the lessons of European cities like Barcelona they should be worried about where things are headed.

In 2008, Barcelona built a desalination plant to take the salt out of ocean water. It was very expensive and energy intensive and was paid for by the people of Barcelona. And it wasn’t needed. There was plenty of water for the city to drink, but nitrate levels from intensive pig farming in the region of Catalonia had made their water undrinkable.

The parallels with Canterbury are numerous. Both cities lie on fertile plains, with plenty of land and water. While we have a love affair with milk, the Spanish are passionate about pork.

As Catalan pig farming grew, the question arose of what to do with the resulting sewage. At first, the pig farmers put it in the rivers, which threatened the drinking supply. So the people paid the pig farmers to collect the sewage and spread it on the land. Eventually, the sheer volume of pig farming meant the land couldn’t use all the nutrients. Once again, it ended up leaching into the rivers. Almost half of ground water in Catalonia is now unfit to drink.

Instead of asking pig farmers to pay for the true cost of their operations, the local government opted to bear it instead. Among other initiatives, it built the desalination plant and spread the €6million annual cost over Catalonia’s taxpayers. They now pay for expensive water so they can have cheap pork.

It’s a bizarre situation that’s blatantly unfair and economically insane. Instead of dealing with the cause of the problem, they have opted to pay more to put a band-aid over it. It is a classic example of privatising profits and socialising losses.

This is the future of the Canterbury Plains if we keep going in the direction we are headed. Already the land can’t absorb all the nutrients being spread on it, which is why nitrate levels in ground-water are rising. We should have seen the warning signs long ago when the environmental problems emerged, but now the basic human right of clean drinking water is threatened.

We need to learn from Barcelona and deal with the cause of the problem, instead of paying even more for a band-aid.

No one has the right to pollute our fresh water. Cantabrians need to decide what pollution and water use limits are acceptable to them. Then, market-based instruments should be put in place to reward farmers who operate in an environmentally friendly way and encourage the rest to transition to sustainable farming practices.

We simply cannot continue with business as usual.


ACT’s Cartoon Version of Freedom

The ACT Party’s relaunch in Auckland yesterday was mostly made up of reheated policies from the 1990s. However, it did include a new colour (pink), a renewed focus on ‘free speech’, and a new slogan: “ACT for Freedom”.

The trouble is that the idea of freedom has come a long way since the 1990s and no longer means what ACT thinks it does.

ACT’s rebrand comes on the back of some good work. They have been leading an important debate about assisted dying, which is about improving individual freedom of choice in a carefully regulated environment.

More recently, both ACT and the Green Party on the other side have sunk into the murky swamp of free speech and identity politics. This has apparently attracted them some donations, but is free speech really about freedom? What is ‘freedom’ these days anyway?

What is Freedom?

The idea of freedom has come a long way since the 1990s when ACT first started. Back then, freedom was all about freedom from government intervention. Around the turn of the millennium, Nobel Prize winning economist Amartya Sen started talking about “development as freedom”. In other words, not just freedom from but also freedom to do things that enable a fulfilling life. I argue that freedom is actually a balance between these two perspectives.

From a values perspective, this more rounded view of freedom is usually grouped with other ideas like creativity, self-expression, and choosing your own goals. In other words, freedom means ‘you do you’. Individuals should decide what success looks like for them and havethe best possible chance to achieve it. That means making sure that other people don’t stomp all over their opportunities. This is why freedom is actually a balancing act between freedom from and freedom to.

A Gap in the Political Marketplace

There is clearly a gap in the political spectrum for people who care about freedom. Labour and their sub-party the Greens are positioning themselves as the parties of “kindness”. This can help freedom to but often sees the State override personal freedoms. Whereas the National Party focuses on traditional ideas of economic and financial success, leading to a focus on freedom from. Meanwhile, New Zealand First and other Christian parties scrap over conservative values, which are usually the antithesis of freedom entirely.

Neither the right nor the left have a monopoly on the idea of freedom. True ideas of freedom and self-expression are actually centrist: they lie between the left and the right. It seems a shame then for those on the Far Right to capture the term, when they (like National) are really only interested in freedom from and economic success.

What Does Freedom Actually Look Like?

A balanced perspective on freedom leads to policy ideas like an Unconditional Basic Income (UBI). Give everyone an amount of money, no questions asked. This offers some recompense for the unpaid work that many people do and gives people the opportunity to pursue their passions.

High-quality education is also essential for freedom because, when done well, it provides equality of opportunity for young people. This is also good for our economy since it enables us to make the most of the talents of all our citizens, not just those from wealthy backgrounds. In reality, giving everyone the same opportunities means spending more on some tamariki than others (which is not ACT policy).

Free Speech

What does a more rounded definition of freedom mean for ‘free speech’? Despite ACT’s clever branding, this issue is not actually about freedom. As I have said, true freedom is about doing whatever inspires you, provided that it doesn’t stomp on the opportunities of others. True freedom also brings responsibilities. This stuff is hard.

Most Kiwis don’t like the Government deciding what we can and can’t say. However, given modern social media and what happened in Christchurch, we can also see the risks of allowing unfettered ‘hate speech’ relating to race or religion, etc. This is a classic example of balancing freedom from and freedom to.

The question is where to draw the line in our speech laws. In my view, this would be best settled not by politicians, but by ordinary people via a Citizens’ Jury. Sure, lawyers would need to advise the jury to help ensure we could enforce the line. But on a ‘values question’ like this one, why leave it to politicians to make the call? Why not let ordinary people write the law? Politicising it will only lead to more grand-standing like we have seen from both the ACT Party and the Green Party. And nobody really wins from that – apart from media hungry for a public spat.

 

Image Attribution: Alpha Stock Images - http://alphastockimages.com/


Private Profits, Social Losses: The Story of the Canterbury Plains

New studies suggest that the risks from nitrates in drinking water could be higher than previously thought. This will add to the list of concerns facing anyone living on the Canterbury Plains.

Why are nitrates a problem?

We have known for some time the risks of increasing nitrate levels in our water. The impact on fish, eels, and bugs living in our rivers and lakes is well understood. Nitrogen combines with phosphorus and light to grow algae. At low levels this provides food for aquatic life, but you can have too much of a good thing. Algal blooms can clog rivers, rob them of oxygen, and even kill off life completely.

Algal blooms are a massive turn off for anyone wanting to swim in a river and they can also turn toxic, which poses a threat to pets and children that might eat them. We are increasingly seeing these sorts of events all over the country thanks to warmer temperatures and higher levels of nutrients in our water.

Much of the increase in nutrients in recent years is the result of dairy farming. Dairy cows pee in far greater concentrations than the soil can use, so the remainder leaches into aquifers and rivers.

Canterbury is unique

However, what is happening in Canterbury is unique. The sheer scale and speed of change in converting land to intensive dairy farming combined with the stony soils mean a tsunami of nitrogen is heading into the region’s rivers and aquifers.

The nitrogen levels in fresh water in Canterbury are often far above the level that can trigger algal blooms. In many places, they are even above safe levels for wildlife.

Incredibly, some parts of the Canterbury Plains are now at high enough concentrations where human health is threatened. So called “blue baby” syndrome occurs when nitrate levels are so high that they prevent a baby’s blood from carrying sufficient oxygen. The Canterbury DHB is closely watching this problem and medical officer of health Alistair Humphrey has been raising concerns about it for some time.

But nitrate levels will continue to rise in coming years as we see the full impact of past land-use decisions.

It gets worse. Recent studies in Denmark suggest that nitrates in drinking water at much lower levels might pose a risk of colon cancer. The evidence is at an early stage but if it holds up, we can expect the World Health Organisation to lower the guidelines for acceptable nitrate levels in drinking water.

Such a change would pose real problems on the Canterbury Plains. Dairy cows would need to be reduced on a massive scale – far greater than current proposals to protect the environment.

Private profit, social loss

The current situation is already pushing the cost of private profit-seeking onto the public. Private citizens have been robbed of their right to quality drinking water and are being forced to buy bottled water or install nitrate removal systems at a cost of $2,000 per person. It is New Zealand’s equivalent of the sort of private profits and social losses that we saw during the Global Financial Crisis.

Sadly, the private profits haven’t even turned out to be particularly significant. Fonterra’s struggles have been well documented and the increased milk supply from places like Canterbury hasn’t made their job easier. Farmers have taken on large debts, betting on a high price for milk that hasn’t eventuated. Many dairy conversions have been carried out purely to pursue capital gain in land values.

Now, we face the massive challenge of transitioning an industry that is already struggling both economically and financially. The head-in-the-sand approach of the previous National Government isn’t good enough. The blunt regulation pushed by the likes of the Green Party will see farmers go under in huge numbers. The Opportunities Party has developed market-based solutions that reward farmers who innovate and farm in ways that don’t damage the environment. Only then can we improve the environment without sending farmers to the wall.