15 Dec 2020

Climate change: New Zealand not on track to meet Paris obligations - MBIE

2:14 pm on 15 December 2020

The new minister for economic development has been delivered a blunt message about New Zealand's lack of progress on climate change and the potential price tag that could result in.

Minister of police Stuart Nash.

Economic and Regional Development Minister Stuart Nash. Photo: RNZ / Dom Thomas

The ministerial briefing from the Ministry of Business, Innovation and Employment (MBIE) says New Zealand is not on track to meet its Paris Agreement obligations, creating a "large fiscal risk to the government if they are required to bear the cost of purchasing international units".

"New Zealand's gross emissions have remained stubbornly flat over the last decade or more ... even with strengthened domestic action, we will likely need to use offshore mitigation to meet this target," the briefing says.

Last term the government passed the Climate Change Response (Zero Carbon) Amendment Act but MBIE says "meeting our domestic and international emissions reduction obligations and adapting to the physical impacts of climate change will require significant structural and investment decisions to be made over the course of the next three years".

"Delayed action will likely require more abrupt and costly adjustments in the future," it concludes.

Māori and Pasifika hit hardest after economic shock

The briefing also paints a bleak picture of the disproportionate impact of economic downturns on the jobs and wages of Māori and Pasifika, made worse by Covid-19.

"Despite a responsive labour market, New Zealanders suffer from relatively severe wage scarring during downturns. Following a recession ... there is a risk that people return to work in lower-skilled, lower waged roles than what their experience and skill would suggest.

"This results in persistent wage scarring impacts that last well beyond when headline figures have returned to 'normal'," the briefing details.

"Economic outcomes are not evenly distributed across groups of people and regions, and income distribution is more unequal than the OECD average.

"Education, health and housing outcomes vary strongly by socio-economic background and ethnicity - Māori and Pasifika tend to fare worse. The unemployment rate for Māori and Pasifika is typically more than twice as high than for New Zealand Europeans."

Covid has "compounded" this and other economic challenges.

"Border restrictions, disrupted freight routes, and overseas economies focusing their attention inward has only made New Zealand more remote from trading partners and global value chains; financial pressure across the economy reduces the ability of firms to absorb costs of decarbonisation and risks short-termism in business


"Māori and Pacific communities are likely to be disproportionately affected by the recession," it concludes.

It views the screen industry, space and major events as good potential areas of growth for the economy.

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