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The agency responsible for regulating toxic chemicals has warned it will be in a cash crisis by the next financial year, after seven consecutive years of being in deficit.
The Environment Protection Authority (EPA)'s briefing to the new government said financial sustainability was the biggest threat to its operations and it would have to cut its functions unless it got more money.
The EPA is responsible for approving new chemicals entering the country (including substances like pesticides for farming), running the fast-track process for some major new developments, and assessing applications for new genetically modified organisms (GMOs). It ran the process for fast-track consents under the previous government's Covid recovery spending blitz, and may end up playing a similar role in the new government's plans for a fast-track consenting regime.
The briefing said its cash-flow woes had been worsened by expanded functions, inflation, and moving to cloud-based software, which required ongoing fees to use.
The EPA said it had just two staff responsible for assessing new GMOs, and its cash problem may worsen if funding for processing GMOs was "re-prioritised" to a dedicated new biotechnology regulator, as the government wanted. Speeding up access to GMOs was one of the government's priorities.
But, the EPA said in its briefing that it was not the roadblock for GMOs.
"If the government wants to see an increase in the number of assessments of new organism applications, changes will need to be made to the HSNO (Hazardous Substances and New Organisms) Act to address the current limitations.
"Changing legislation relating to genetic modification is likely to be contentious, based on our experience."
Staff growing faster than funding
The briefing said expansions to the agency's functions had meant hiring more staff - up 45 percent, from 149 full-timers in 2016/17, to 216 now. But its baseline funding increased only 9 percent.
For the current year, the EPA has an almost $4 million deficit.
"Without an increase in funding or a decrease to capacities, this model is not financially sustainable," it told the government.
In 2022, the agency got consultancy MartinJenkins to review its operations.
The review said the EPA was operating efficiently and should get $96m more funding over four years to maintain its functions.
"If we do not receive a baseline funding increase... we will need to reconfigure the EPA to deliver fewer activities... as our cash reserves become critical by financial year 2024/25," the briefing said.
The agency acknowledged wait times were getting longer for frustrated applicants who wanted to use new hazardous substances in New Zealand, including farming sprays and other chemicals wanted by the agricultural sector. The agency blamed a lack of funding and crucial staff leaving during the Covid pandemic.
It also noted some of the models it used to assess the environmental risks of hazardous substances were more than 20 years old, whereas other countries used better versions.
"Our models are no longer supported technically, do not fully address a number of organisms and environmental scenarios specific to Aotearoa, and cannot be accessed by applicants to then incorporate the results into their applications. These models are slowing down the assessment process, as they require considerable additional work," says the briefing.
On the technology front, the briefing highlighted the need to upgrade the way it managed the data behind the Emissions Trading Scheme.
