Climate Change

$804 million to fund Cyclone Gabrielle infrastructure response

The impacts of climate change on Aotearoa have been made stark by this year’s adverse weather events. Climate change presents a significant risk to New Zealand businesses. Not only do they face physical risks to their infrastructure, supply chains and resources, they are also experiencing the effects of transitional risks associated with changing consumer demand, increased Government regulation and increased insurance costs.  

How will the Government allocate spending to help with the rebuild from Cyclone Gabrielle, and how is it balancing climate mitigation (halting climate change) with climate adaptation (ensuring we are adapting to the risks presented by climate change)?  

Budget overview – policy highlights  

The Government has announced a significant funding package to help the regions and communities most affected by Cyclone Gabrielle, with $804 million going towards infrastructure repair. Meanwhile a $120 million fund to protect communities from future climate events, including $100 million for flood resilience, has been announced – as adverse weather events continue, adapting and finding ways to shield Kiwis and Kiwi businesses from risk in this new environment will be key.  

But climate adaptation must go hand in hand with mitigation. The Government has announced a range of funding to help New Zealand do its bit to lower emissions, including $120 million for EV charging infrastructure, $300 million for low-emissions investments, and $403 million to help fund warmer Kiwi homes.   

Confirmed new policy areas

Cyclone Gabrielle recovery: 

• $804 million ($609 million operating and $195 million capital) to fund infrastructure repair in affected regions including roads, rail and rebuilding homes and schools:  

• $250 million of immediate repairs to state highways, bridges and local roads 

• $475 million investment in rebuilding railways, state highways, bridges, and local roads 

• $130 million operating to fund temporary accommodation and health services, as well as targeted support for affected Māori and rural communities  

• $11 million to top up community support funds and reduce food insecurity, help businesses retain staff and help displaced workers to find new employment quickly 

• $13 million to help connect individuals and whānau to the support they need 

• $30 million committed to address time-sensitive health and safety and animal welfare challenges in primary sector and rural communities 

Climate change adaptation: 

• $120 million operating to protect communities from future climate events, including a $100 million fund to help councils invest in future flood resilience  

• $39 million to improve the mapping of New Zealand’s coastline and identify coastal areas at significant risk of climate-related hazards and natural disasters 

• $45 million to help enhance data on adaptation and mitigation, including data on how climate change impacts Māori, to help improve resilience to climate hazards 

Climate change mitigation: 

• $120 million for electric vehicle charging infrastructure 

• $30m for clean heavy vehicle grants including trucks  

• $300 million to accelerate private investment in low-emissions activities  

• $50 million investment in renewable energy solutions to help improve access, affordability and security of energy in remote, low-income and energy-insecure communities  

• $32 million for green hydrogen for use in regions and sectors that face grater barriers to decarbonisation  

• $403 million to expand the scope of the Warmer Kiwi Homes programme 

• $38 million to design and implement a new regulatory regime for the NZ ETS and a centralised exchange for New Zealand unit trading to improve the integrity, efficiency and trust in the NZ ETS as the system matures, as well as funding to set up an agricultural emissions pricing scheme 

• $10.7 million investment to reduce diesel generation and establish a renewable energy system on the Chatham Islands 

• Establishment of a new plant health and environment laboratory in Auckland to help manage current future biosecurity risks and to support future industry growth 

Public transportation: 

• $327 million to reduce the cost of public transportation. This investment will extend the Community Connect programme to offer free public transportation to children under 13, and half-price transportation to Total Mobility passengers and passengers aged 13 to 24. 

• $49.3 million investment in public transport workforce 

Business impacts and considerations  

Phillip Roth, BDO Sustainability Advisory Partner, says: 

“It’s good to see the Government is taking climate change adaptation seriously with today’s announcements. Aotearoa faces significant risks from climate change, and these absolutely will and are impacting businesses and our economy. That said, this shouldn’t mean that the Government dials down on its climate change mitigation efforts. We absolutely need to find a way to reduce our carbon emissions as a country, otherwise the adverse weather events that have caused so many challenges this year will only intensify. It’s good to see the Government announcing funding for EV infrastructure, and the decarbonisation of some energy-intensive sectors with green hydrogen. The NZ ETS is of course always evolving, and it will be interesting to see what comes of the Government’s efforts to upgrade the regulatory regime around the system as it grows and matures. It is also very encouraging to see support for the Chatham’s with new initiatives as well increased focus and support for the Warmer Kiwi Homes programme. 

 It’s absolutely imperative that business leaders understand the risks climate change presents – but also the opportunities. Those who embrace sustainability stand in good stead to meet changing consumer demands and carve out a point of difference in the market.” 

Charles Rau, BDO Gisborne Agribusiness Partner, says: 

“It’s pleasing to see the Government’s support package for farmers in the regions affected by Cyclone Gabrielle, although the detail of how this will be distributed and to whom is yet to be announced – effective implementation will be key to success. The damage from the cyclone is significant and this package could provide a lifeline to businesses, particularly agribusinesses, which form an integral part of New Zealand’s economy. There are many problems agribusinesses in cyclone-affected areas are facing at the moment – in the short term, there are some upfront costs for farmers to address damage to fencing and roading. There’s also a much longer-term cost over several years in dealing with loss of pastures and erosion, as well as loss of fertility due to silt, which may never return to normal in the farmer’s lifetime.” 

Quick tips & questions 

• If you are located in a region affected by Cyclone Gabrielle, do you have an understanding of the funding and support available? 

• Do you have a robust understanding of the risks climate change poses to your organisation (this includes physical risks such as rising sea levels damaging infrastructure, and transition risks such as changing customer demands as consumers seek more environmentally-sustainable products and services)?  

• Do you have a strategy in place to mitigate those risks?   

• Do you have a sustainability strategy in place?  

• Do you know your carbon footprint?  

• Have you explored what rebates and other Government help is available to you and your business to help use lower emissions?  

• Are there opportunities available to your business whether now or in the future as part of the emissions reduction plan?  

More information and help available 

You can learn more about the new climate change expenditure announced today at the Government Budget website here.  

Climate change, like any business risk, requires challenging conversations, ongoing focus and robust planning. Keep the conversation alive with your BDO adviser regarding Budget 2022 policy impacts and how to best address sustainability challenges in your business. You can read more here about BDO’s ESG (Environmental Social Governance) advisory services and how we’re providing practical sustainability advice for businesses.  

View our Understanding Climate Risks guide here.