Waste Minimisation (Waste Disposal Levy) Amendment Bill

Members, we come now to Part 2. This is debate on clauses 13 and 14, “Amendment to Waste Minimisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009”, and Schedule 2. The question is that Part 2 stand part.

I want to explain to the Minister, because I suspect she doesn’t know the history, how we’ve got to where we have in respect of levies on solid waste. The waste minimisation legislation was brought into being as a consequence of an initiative by the Greens’ Nandor Tanczos and the Helen Clark - led Labour Government. The Government took over his member’s bill, and the Waste Minimisation Act was passed. At the time, the levy was set at $10 per tonne of waste going into municipal class 1 landfills and none of the others.

There was a change of Government, and the subsequent John Key - led Government did nothing to extend the scope of it to other landfills or to increase the levy beyond $10. The Jacinda Ardern -led Government came in. Eugenie Sage was the Minister—a good Minister—and Local Government New Zealand (LGNZ) had passed a resolution saying they lacked the money to build the infrastructure needed to reduce waste going to landfill, and New Zealand has amongst the highest per capita levels of waste going to landfill in the world. It was a shameful position that New Zealand was in.

So Eugenie Sage came to me, as the then Minister for the Environment—I was the Minister, she was the Associate Minister—and said that we should do something about it. I took it to Winston Peters, and Winston Peters said, “Let’s do this properly. Let’s not just tamper with this; let’s do it properly.” Therefore, as a consequence, the breadth of landfills covered was increased, as set out on the back page of the bill—Schedule 2, which is being updated here—so that construction waste landfills and other solid landfills pay a lower rate, but actually still higher than the $10 that was applying to municipal waste at the time, and, on the back of the LGNZ resolution from local government, we thought, “We can carry this, and we can maintain a social and political consensus that this needs to be done.”

We then proposed increases that have, effectively, increased this levy already by about 600 percent. Who can ever achieve that? You’d think, “How was that achieved—how was that achieved?” Well, Minister, this was achieved by political and social consensus. How was that achieved? Scott Macindoe knows how this was achieved.

Tom Rutherford: Who? Who?

Hon DAVID PARKER: Scott Simpson, sorry—Scott Simpson. Sorry, Scott. I went to the Hon Scott Simpson, and I said, “Let’s not politicise this, and we can do this and meet the need, and at least one area of environmental policy will be reasonably well funded to clean up the mess that we as humans have inflicted on our corner of this planet.” It’s worse than just about any other corner of the planet, in terms of volume. Our dumps have managed a lot better than a lot of other countries, but there’s still a lot in them. So I went to Scott. I then played all the other angles. You know, one of the reasons why National doesn’t play up on the waste management space is that the Prime Minister’s brother is very senior in the waste management industry—and he’s a good man. He’s a good man.

When there was more money coming into the Waste Minimisation Fund, one of the things we funded was a million-dollar machine that’s in Auckland, in the private sector and, in part, funded by Government money, to chop up computer screens and old TVs. It’s an incredible thing. It chops the glass and the plastic up into small parts. It has all these optical sorters and uses air to flick off these little pieces that are about a couple of centimetres out. It sorts them into all of the different components—a fantastic thing. Those things used to go to landfill. They are now, through the Waste Minimisation Fund, sorted, and those bulk remainder materials are re-exported to the rest of the world, and they’re reused rather than ending up in New Zealand landfill—smart policy.

The Prime Minister’s brother—or it might be his brother-in-law—was there, and I went to him, and I said, “Look, we’re doing this. We’ve got Local Government New Zealand on our side. We’ve got a political consensus, and that’s always a hard thing to achieve in respect of significant fee increases, even though local government is calling out for them. Can you just have a whisper in his ear and make sure he doesn’t ruin this, please?”

CHAIRPERSON (Greg O’Connor): Mr Parker, just, families—I’m aware you’re being positive, but let’s just stick to the—

Hon DAVID PARKER: No, I’m not improperly bringing in a family. This is a positive story. This is how soft politics works in New Zealand, and this is how you achieve real, enduring change. I’m grateful to him, and I’m grateful to all of the other parties—New Zealand First, the ACT Party, the Green Party—who have cooperated in this so that we’ve achieved this. Now, who does the money come from? It comes out of the pockets of the businesses and the people who send stuff to the dump. That’s who’s paying for this, and so you’ve got to be very careful to maintain this consensus, rather than hiving off the money for things that it wasn’t originally meant for.

So my problem with this change to the Schedule is—I want the Minister to stand up and justify how money coming out of Wellington City or any other city can be used for cleaning up mines on the West Coast or river pollution, which is now within the route that could have been caused by—and I see the ACT member, the Associate Minister for the Environment, here. It could be utilised for those purposes, those other funding lines having been scrapped. That puts at risk this social consensus that we’ve managed to achieve to actually get the revenue for the infrastructure, in this infrastructure-short country where local government can’t pay for their share of the infrastructure. This puts at risk that consensus that’s led to this enormously successful scheme doing what it needs to do to minimise waste. So, Minister, I actually don’t oppose these increases. What I oppose is that you’re putting at risk the consensus that lies behind this.

For some local governments, it’s been hard for them too. So how, Minister, do you justify these increases in fees going for management of what was not previously within the ambit of the legislation? Essentially, before this, it was solid waste, and, sure, we’re up for legacy landfills and we’re up for the policy work for product stewardship schemes, as I explained in an earlier part of this debate. But why would you put at risk that consensus, which has been so carefully arranged in the manner which I have described?

Thank you, Mr Chair. I had a very excellent experience some many years ago in my capacity as political liaison for Greenpeace where I would attend the Bluegreens conferences, which are excellent, I have to say, often. One of the more impressive ones was where it was held in Raglan—

Tom Rutherford: I was there.

STEVE ABEL: You were there. Scott Simpson was there. A lot of people were there. We were taken to the very excellent Xtreme Zero Waste facility in Raglan, where they are diverting, I think, around 90 percent of waste from going to landfill—incredible recycling, a dump shop, and great composting facility. That is the sort of innovation, improving of what is possible with waste, that should be being funded by a levy.

We support a waste levy. We support an increase in the waste levy, and I believe my colleague Kahurangi Carter will speak to how much that increase should be. It should, in fact, be greater than what is being proposed. But, as Led Zeppelin say, if the levee breaks, we’ll have no place to stay. What this legislation does by its allocation—that seemed to be a very in-joke that no one got!

CHAIRPERSON (Greg O’Connor): We were laughing within, Mr Abel.

STEVE ABEL: Thank you. I appreciate that, Mr Chair. With this allocation of that levy to things beyond the purpose for which the Waste Minimisation Act was originally set up—with the allocation of that levy to other things—it will be literally frittered away on things that are not to do with waste minimisation. So on the one hand, you’re increasing the levy, but on the other hand you’re vastly broadening the category of things that it can be spent on. Therefore, the increase, at $5 a year, is barely beyond the increase in interest. It barely stays ahead of interest rate increases at $5 a year. It needs to be more.

The impact of it being allocated to so many other purposes is that it is near nominal. In fact, you may well find—because 50 percent of it is going to go to councils, as it should, but that 50 percent that is open to the discretion to be spent on other things, such as remediating mine sights—suddenly, that we may even get less money spent on waste minimisation, because the category is so broad for how it can be spent.

So we submit that the levy should be greater for the categories of waste “construction and demolition fill” and “managed or controlled fill disposal”. It should be greater than a $5 increase—and my colleague Kahurangi Carter will speak to the exact dollar amount. But we should not increase the municipal disposal rate more, because it is not fair that general members of the public, who are disposing of their municipal waste, should be being pinged for the cost of cleaning up a mine site, as this legislation currently proposes to do. Thank you.

I’m very mindful that we traversed the broader scope of the bill in Part 1, but I note also that the Green Party would like a much greater increase in the levy rates. We on this side are very careful about the impact of any increases on the cost of living crisis that businesses are dealing with and not wanting to also impose significant costs on to the building and construction sector in a housing crisis. So we are happy with the rates as they stand.

Can I just note—because the member is so fixated on mining—that mines have remediation as part of their conditions under the Resource Management Act.

I’ll just note that we’ve had two very good speeches that have gone a little beyond but have provided good context. But from here on we’ll be reminding members of the relatively narrow focus of this Part. The Hon—

Glen Bennett: Rachel Brooking.

CHAIRPERSON (Greg O’Connor): Rachel Brooking.

Thank you, Mr Chair. It’s much easier for us. You just have the simple name, and often we all call you “Madam”!

CHAIRPERSON (Greg O’Connor): Quid pro quo!

Hon RACHEL BROOKING: Yeah, exactly! So we’re talking here about how Schedule 2 sets the levied rates. These are actually in regulation. They are being amended here in the primary legislation. It’s not necessary, but the regulation does run out in June 2025, so I understand the logic of putting it in the primary legislation. So that first column on the table is as per the current regulations; there’s no change to that. Then we see it does go up.

Given the speeches that we’ve had, I wonder if the Minister has thought of adding different disposal facilities—we’re not even calling them “disposal facilities”—or considered levying, say, mine sites. That could be included here, somehow. I know she just mentioned the Resource Management Act and conditions of that, but, of course, that only applies to recently consented things, or newly consented issues rather than older ones, unless it’s been reviewed.

Going from David Parker’s point about social consensus—and I note that the Environmental Defence Society has a conference coming up, and often there are conversations amongst members about these issues at those. I can’t comment on a Bluegreens conference, because I’ve never been to one of those. Noting the Greens’ amendment here, in the name of Kahurangi Carter, that does really make these levies a lot bigger. Has there been much work into considering how much they should be raised by, given that it’s an amendment to regulations normally? Would the Minister commit to talking with other parties about what those levies should be via regulation? Is that something she might want to do?

My last question is, really: why is this bill here under Budget urgency? Is the only reason because the Government is going to rely on this fund for things that go well outside of waste? The legislation already goes, via regulation, to 30 June 2025. The supplementary analysis report talks of the extra $171 million generated over the next four years. I mean, that is my question. Are we in urgency here on a Saturday lunchtime because the Government is relying on that $171 million, or are there other ways to do this, and could we, in fact, send this bill to a select committee and have the discussion that we would have in the select committee? I know the levies are normally done in regulations, but this is a useful discussion to have about what they should be and where that social consensus is for them, and I invite the Minister to make some comment and commitments.

Kia ora, Mr Chair. It’s my second time rising and, yeah, it is a challenge to listen. I want to come back to the Minister. My first question, actually, is a really simple one, related to the Hon David Parker. He did ask you a question and I would really like to hear the answer to that. But I think it was around consensus. You know, he obviously gave a really good history and a good story about how this came about, but for us here in the Labour Party, it would be nice to know—and I guess it follows up on Rachel Brooking’s question around why we’re doing this in urgency. So I wonder whether I could have an answer from the Minister around how she could consider consensus on this.

And, secondly, which I guess is totally related in terms of why it is in urgency—in Part 2 here, as we look at the “Amendment to Waste Minimalisation (Calculation and Payment of Waste Disposal Levy) Regulations 2009”, I want to come back. I’m spending a lot of time reading the supplementary analysis report, and there’s a lot in here about the why—why Cabinet has made these choices. And I guess I need to know and understand a bit of that process. Obviously, there has been some consultation. We can see here there have been some stakeholder views put in. But, of course, those stakeholders don’t get to have the full experience of sitting in front of a select committee and putting in thoughtful submissions that we as the Environment Committee would have considered.

In this analysis, it talks about fiscal savings for the Budget. And, I guess, as we look at the calculation table, it concerns me that they directly mention Budget savings to ensure that, obviously, they find some money somewhere else. And then I flick through—and there’s lots of bits of paper here for me to rustle through. I guess, when we look at the schedule of payments, the document makes it really clear that that table is an increase, but the broadening of what the money is for means that there will be assumed consequences from it. And I want to just mention that it talks, on page 11, about the objective to “maintain the efficiency and effectiveness of the levy regime”. It has the potential, the way the bill has been drafted, for the calculation of the waste payment to be nearer a tax rather than a levy. And that’s, I guess, what we want to understand. It talks about, on page 13, the Treasury’s Guidelines for Setting Charges in the Public Sector, when it comes to levies. But, in a way, the levies may be more akin to a tax.

I really want to make sure that this is a levy, in terms of the schedule around the calculation of the payment, and then come back to what the Hon David Parker asked around consensus, because we want to be constructive and we want to make sure—as I said in the previous section of the legislation—that this is tight and right so that it works well. And then, again, I want to support my senior colleague the Hon Rachel Brooking in terms of making sure—you know, could we maybe consider that this is referred to a select committee and taken out of urgency, in that?

So, again, Schedule 2 around the levy rates—how does that work? As said in this document, there is the potential of it being closer to a tax than a levy. Are you confident you have that right? And, then, how do we work at building consensus? Thank you, Mr Chair.

Thank you, Mr Chair, and I thank the Hon David Parker who gave us the history lesson on the levy, as it came in from back in 2009. Can I just say there were discussions with the Green Party, prior to the amendment bill coming into the House, regarding the appropriate levy rates. It would have been very difficult to have come to a consensus given the extreme increases that they wanted to see in what is a very difficult financial time for businesses, particularly, and households.

Can I just reflect on the member Glen Bennett, who just sat down, and his allergic reaction to the notion of savings. The financial situation this Government has been left in—certainly, it was a very responsible thing for us to do to look for savings to reduce Government spending. We do not shy away from the fact that the requirement for this to go through urgency is to enable this to take effect by the start of the next financial year to achieve some of those savings. The increase in the levy is modest to reflect what we believe businesses and households can cope with at this time. The member may not have been here—sorry, may not have heard the discussion around the levy. The levy is still a levy. It retains a link between those paying the levy and the outcomes being funded.

Thank you, Mr Chair. I am honoured to be speaking on behalf of my tabled amendment here, which is looking at clause 14 and the actual levy rates for these three different categories: business and for our households.

We in the Green Party agree that the cost of living for everyday Kiwis is terrible and it’s only going to get worse under this Government. So we need to be really serious about waste minimisation. The Minister has talked about New South Wales broadening their scope of environmental activities. Well, my question to the Minister is: if we’re using New South Wales as an example for why we’re broadening the scope of activities, then will she bring the waste levies in line with New South Wales, which are currently $160 per tonne? New Zealand, we’re looking at $60 a tonne, so that is less than half of what New South Wales is paying for tonnage.

Now, let me just explain about industry. Industry will only invest in waste minimisation and reducing their waste to landfill when it costs more for them to send it to landfill than it does to reduce their waste. That is what a waste levy is about. We know that, at the moment, our waste levy is too low for them to be actually motivated to make those changes that we really, really need. So let’s understand that. If the waste levy goes up to a sufficient amount, industry will actually make that difference and work on their waste minimisation, and we will live up to our environmental obligations. So the waste levies should be going up, and they should be going towards waste minimisation infrastructure and projects, because we have a $2.4 billion deficit in infrastructure.

Let’s talk about what that infrastructure actually is. So my colleague here Steve Abel talked about Xtreme Zero Waste in Whāingaroa, Raglan. That is a resource recovery centre—it’s not a dump; it’s about recovering the precious resources they have mined and extracted in this exploitative, extractive system that we currently live in, and they recover those resources. We have those same things like at Wānaka Wastebusters, we have them at Ethical Waste in Ruapehu. People at the flax-roots, in place; local people, who know how to recover those resources and keep that capital within their communities. These are amazing initiatives that actually send a real message to New Zealand and the world that New Zealand will clean up its own mess.

We’re not going to leave it to our next generations to have to be cleaning up the mess that we are creating today. There’s a $2.4 billion deficit in infrastructure, and you want to take money away from waste minimisation. We need to be increasing the waste levy, and I just implore the other side to really, really focus on the interconnectedness of the world and how the world really works, because as New Zealand falls further and further behind other countries with regards to our environment, our climate action, and our waste minimisation, that is going to affect our trade, because no one’s going to be wanting to buy dirty products from dirty New Zealand. We have a clean, green image that our tourism industry—that New Zealand—relies on and that our businesses rely on, like the beautiful Ruapehu, which is a tourist industry, and we need to make sure that those precious taonga that have been gifted to us by Papatūānuku are respected.

I think that this Government really needs to go back and reflect on what the repercussions are for our tamariki for the next generation and for every generation after that, because what you are not understanding is that there is no economy without the environment—there is no economy without the environment. We need to be serious about our commitments to our next generations, to Papatūānuku, and to living in harmony with nature.

Thank you, Mr Chair. I’ve got some questions for the Minister. They relate to Schedule 2, and they relate to the title, and they relate to the commencement. So I’ll just go through them one by one, starting with Schedule 2. They really relate—

CHAIRPERSON (Teanau Tuiono): If you could focus on your question on Schedule 2; this is not the debate on the title and commencement.

FRANCISCO HERNANDEZ: Yes, I’ll focus on those questions, then. My question to the Minister relates to the supplementary analysis report, page 15, where the officials go through the costs and benefits of the increases to the levy rates. So I’m just going to quote paragraph 72: “higher levy rates may incentivise more re-use of materials and less use of virgin materials, with associated impacts on natural resources and greenhouse gas emissions; reduced greenhouse gas emissions from organic waste disposed of to landfills”.

So my question to the Minister is: has the Minister had specific advice on how these impact New Zealand’s ability to meet our domestic methane targets? Have we had specific advice on that? And the second part of the question is: have you had specific advice on how these changes to the levy rates affect New Zealand’s ability to meet our nationally determined contribution to the United Nations as part of the Paris climate talks? I’ll leave it with those questions and get back to my other questions around title and commencement later.

Thank you, Mr Chair. I rise to take a call in relation to Schedule 2 for the Waste Minimisation (Waste Disposal Levy) Amendment Bill. I had a previous—just a recap—question in Part 1 to the Minister in relation to existing Orders in Council that provide waivers to the waste disposal levy, and the Minister, in response to that, said that there is a waiver in the bill.

I had an additional question, but, actually, it is in relation to Schedule 2, because, then, that means, on the basis of that response that the current waivers for those local operators that were to be revoked by 24 July 2025, every operator of a disposal facility will be subject to the new fees, which are now set out in Schedule 2, until they’ve received a waiver, despite them already having a waiver under current regulations. So my question is to the Minister: when she said, “there’s a waiver in the bill”, does that actually revoke, then, the current Order in Council waiver so that they would need to apply again to get some reprieve from Schedule 2 increases?

Mr Chair, thank you. I’ve got additional information for the member’s question. So the Severe Weather Emergency Recovery (Waste Minimisation) Order 2023, which amended the Waste Minimisation Act in specific cyclone-affected parts of New Zealand and which continues to apply after 24 July 2025, is not changed by this bill. And operators of dispersal facilities within the affected local boundaries are exempt from paying the levy on cyclone and flood waste disposed of before the close of 24 July 2025. So for the exempted types of waste in the exempted areas disposed of before close of 24 July 2025, the levy does not have to be paid.

Thank you, Mr Chair. Firstly, if I may, it would be great for the Minister for the Environment to answer my previous questions—that would be great. On that note, one of the things I noticed the Minister previously mentioned is that there has been no forecasted increase in the levy, which is one of the reasons that this was introduced, as it is laid out in Schedule 2 here. I would just like to say, I think that regardless of who would have been in Government, maybe we would have seen a similar amendment bill coming through that potentially would have increased the levy and potentially increased the levy at the rate that my colleagues Steve Abel and Kahurangi Carter’s amendments have indicated.

The two questions I have for the Minister relating to Schedule 2 and this part—tied to this is the first one around levy avoidance. I want to draw people’s attention to the supplementary analysis report and, again, bring attention to the importance that we are seeing a supplementary analysis report in lieu of a regulatory impact report because of the fact that this bill is going into urgency and there simply wasn’t enough time to put together a regulatory impact statement. So, on paragraph 88—sorry, paragraph 71, here it talks about the projected levy revenue that we will be seeing as a part of this increase in the levy across all four classes. But what we see in paragraphs 88 and 89 is that an “increase in levy rates may result in levy avoidance behaviour”—particularly with “waste being inappropriately disposed of at landfills with lower levy rates”. Now, taking into consideration the other possibility you have put on the table in terms of amendments to the paper and to the levy rate, what sort of mitigation strategies has the Minister considered at this stage to reduce the chances of levy avoidance, and is levy avoidance currently factored into the projected revenue rate that we see in paragraph 71 of the supplementary analysis report? So that’s my first question.

My second question is around the community cost with the increase in levy and, particularly, the municipal disposal facility, class 1. So, on page 3 of the supplementary analysis report, we see the limitations and constraints on this analysis—in particular, I point to the section on the “Impacts”. So under the “Impacts” section, it says that “the analysis included limited assessment of the impacts of levy rate increases on certain population groups”, such as the average household, and, in particular, “the potential risk of unintended consequences and perverse outcomes … could not be examined.” So I would like to know from the Minister: what sort of strategy does the Minister have when it comes to the community impact of increasing the levy of the municipal disposal facility class 1? This is in addition to what we also see in paragraphs 63 and 66, which also speak of the fact that “This proposal has not been subject to external engagement or consultation.”, and “the sector will likely have a range of views on amendments to levy settings.”

So I think these two questions are really, really important for the Minister to clarify. The first one is: what is the Minister’s strategy around levy avoidance which could be a result of this, particularly when people will dispose of waste at a lower-tiered facility in order to get a lower rate, and has that been factored into the projected revenue? The second one is: what sort of impact assessment or analysis—beyond the supplementary analysis report—has been done on the community cost and, particularly, the household cost with the increase to the municipal disposal facility, class 1?

Thank you, Mr Chair. In answer to the questions that have been put regarding avoidance, there is additional reporting that comes in on 1 July this year. So some of that will address it. Also, I would remind the member that I have a legislative bid in—for later in the year—for wider reform of the waste legislation. We will particularly look at some of the avoidance matters around things like fly-tipping and things like that. So, along with that avoidance, I’ve given the assurance to the Hon Rachel Brooking that that would be the appropriate time to look at the local authority scope as well. So there is some additional reporting coming in, in July this year, which will help to mitigate—but there will be an opportunity to put more mitigation in as we look at that wider reform of the waste legislation.

I am trying to remember—oh, the impact. I think I commented, in either my first or second reading speech, that the amount per family was around about $5.07 per annum once the municipal rate got up to the full $75 per tonne in year 2027. So it’s a modest increase and a modest impact on an average family.

I move, That debate on this question now close.

Thank you, Mr Chair, and thank you, Minister, for those answers. I just want to clarify, and ask you a question on, your comment around the cost of living, in terms of the impact on people.

For context, the current municipal disposal rate is $60 per tonne, the managed or controlled fill disposal rate is a mere $10 per tonne, and the construction fill and demolition fill disposal rate is only $30 per tonne. So, already, municipal disposal is twice the cost to your average New Zealander than it is for construction and demolition fill. That is a massive let-off for industrial waste disposal. Industrial monofill, waste generated from a single industrial process, according to the supplementary analysis report, does not get any levy at all, and those can include toxic wastes, potentially. Inert but highly contaminated soils and rubbles have only just received a levy of $10 as of July 2023.

So, right now, we are making the average New Zealander pay more for their domestic waste disposal than we are industry, by a significant margin. Our proposal in the amendment by Kahurangi Carter is not to increase any further than what you are proposing, Minister, the rate for municipal disposal, from $60—and $5 a year on upwards. We are proposing a $20 increase per year on construction fill and managed or controlled fill. Now, the crucial thing is, and the question to you, Minister, is what analysis was done—

CHAIRPERSON (Teanau Tuiono): Please engage through the Chair, not directly with the Minister.

STEVE ABEL: Pardon me, Mr Chair. The question to the Minister is: what analysis was done on the impact on reduction in waste volumes by a higher threshold of levy? Was there analysis done on that?

The core of that question matters because, as we know, in other jurisdictions, when a levy reaches a certain level, such as $150 or $160 a tonne, it drives new efforts by industry to remove waste from landfill. That’s when we start to get the actual waste minimisation effect. You don’t get the waste minimisation effect if the levy is only going to be $70 by 2026, for construction and demolition waste, significantly behind what’s happening in Australia. A $20 per annum increase gets us closer to what we need to be doing to disincentivise waste going to landfill.

The other thing to consider, Minister, in terms of the cost of living impact, is that waste is a cost and a burden on our society. What is the extent of that cost and burden, and how much more quickly can we drive it down by sending strong signals that we are disincentivising waste? If we don’t send those strong signals, we risk the waste problem being worse and we don’t get the infrastructural funding for making the change, but what’s more, of course, if the levy is effective as a Pigouvian disincentive tax, the volume of money coming from the levy goes down.

We want the income to Government from the levy to be decreasing, because that is a sign the levy is working as a disincentive. What analysis was done on the levels at which we maximise that decrease in the volumes of waste going to landfill? Thank you.

Kia ora, Mr Chair. Actually, I’m going to ask a question, and I know there are rules and procedures around what Cabinet can and can’t say, but it’s more about the process around the levy space. But I just want to correct the record because, in my previous contribution, actually, I made a mistake, and I want to fix it just for the sake of Hansard, who are doing a sterling job in capturing all of our amazing kōrero. I did say that there had been stakeholder engagement, but, actually, there hadn’t been stakeholder engagement on this. In my brain, I did quickly read it, so I just apologise for that. There was no stakeholder engagement on this legislation. I just wanted to clarify that.

Coming back to the question around Cabinet processes and the increasing of the levies—so, obviously, we have been talking about that a lot, and, obviously, you’re a champion of the environment, as Minister, and I’m glad to hear, as you just said, that you are putting a bid in later in the year. But I’m just wanting, I guess, to get assurance from the committee in terms of—you, obviously, can’t disclose the conversation, but there was actually work done to get these numbers right, because the numbers are obviously increasing, and, obviously, it’s really how that was calculated, understanding that work. So my first question, really, is in terms of how the Minister led on that in formulating this legislation.

I guess the reason I bring it up is because, obviously, in a usual situation, in select committee, I know that industry would have submitted in the hundreds and, potentially, thousands on this, and they all would have had an opinion on their levy. They all would have had an opinion on where it’s set and where it is. And so that’s why I just want to understand from the Minister in terms of whether she consulted with others. How did they come up with these numbers? Or did they just spin a magic wheel in the Cabinet room? I don’t know.

Secondly, around that—so getting to understand the levy—is the lead-in time and just where that fits in terms of, again, how the Minister for the Environment landed on that lead-in time, as the additional levy rates increase applies from 2025. In terms of the lead-in time, I’m hoping and guessing officials had given advice on that. I know there’s things, obviously—because you can’t just do them—well, there’s some things you can slam through overnight but other things you can’t when it comes to communications with the sector and when it comes to systems change to get the computer settings right, and those types of things. So, in terms of that lead-in time, is the Minister confident and had good advice to ensure that everything is lined up in terms of getting it right for that increase to apply from 2025?

We’ve talked a lot about social licence in the committee stage. We’ve talked a lot about working across the aisle. We’ve talked a lot about how we bring people with us. And I guess, again, if this was just dumped into the inboxes of industry, of those who are having to dispose of products, what would it be for them just to suddenly have that “Well, this starts at this date.”? But just to know that there is a clear, I guess, communication plan and that they feel that—and, for most of us who have worked in the real world, we set the date for where we want to be and then work our way back to make sure we have all our ducks in a line, all our protected ducks, all our waterways and riverways in a line and clean and green, so that we can move along and care for those ducks and support those ducks and take photos of those ducks and make sure they’re safe and protected. So that lead-in time—it’s important that we get it right.

I assume that this is going to pass. I assume that, suddenly, magically, the Leader of the House isn’t going to come bowling in here and say, “Actually, stop. We’re going to take it to select committee.” I’m guessing that’s not going to happen. So we just want to make sure—

Hon Rachel Brooking: There’s still time.

GLEN BENNETT: There is still time—there is still time—to make sure that there is a decent lead-in time so that the sector, so that industry, isn’t blindsided yet again by another piece of legislation that’s rammed through.

So just the processes that the Minister championed; the lead-in time, just to make sure we get this right, because we actually want New Zealanders to do right by waste. And, as I’ve said many a time, we want to keep it tight, and we want to get it right.

Mr Chair, thank you. I will answer the questions by the Green member Steve Abel and may, at the same time, answer—I think there might have been a question somewhere in the previous speaker’s discussion.

The calculations, yes, were done around the impact of the changes around the construction sector, based on the estimates of how much waste is produced during construction of a new build. The levy costs, by the time of getting to 2027, would increase for a home being built, for an average sized three-bedroom home, by around $46 a house, while the levy cost for disposal of materials from a typical house demolition would increase by about $206 for each demolition. I acknowledge these are modest, but given that we are in a housing crisis, we are very, very mindful of not putting anything in the way of houses being built and, in fact, are trying very hard to reduce some of the compliance costs around that.

With regard to why there is a difference between the different classes of facility, there is much greater ability for reuse and recycling of municipal waste and much less for the classes 3 and 4, the managed or controlled fill disposal facilities, where lightly contaminated materials are going in, and there is very little opportunity for recycling there. And, similarly, with the construction and demolition waste, there is increasing infrastructure, but that is certainly not as mature as the infrastructure that is there for dealing with municipal waste.

Thank you, Mr Chair. I just want to reiterate my question again because the Minister hasn’t answered it yet, and I acknowledge that it might be because of some confusion between myself and my esteemed colleague Lawrence Xu-Nan. The Minister might have thought that she’d answered my question when in fact she’d answered Lawrence’s question.

So I’ll just reiterate my question again and add on a couple more. Again, my question asked whether the Minister has had specific advice on how the levy rates and the proposed increases affect New Zealand’s ability to meet our domestic methane target. And the second part of my previous question was: has she had specific advice on how the levy rates have affected New Zealand’s ability to meet our nationally determined contribution? I have two extra questions as well. We know that there are different levy rates in Schedule 2. There are three different ones: for municipal disposal facilities, for managed or controlled fill disposal facilities, and for construction and demolition fill disposal facilities.

We know that the municipal disposal facilities are class 1 landfills and that the construction and demolition fill sites are still landfills and receive organic waste. So was consideration given to equalising the rates of both of those, to align at least the construction and demolition landfill to meet the rates of the municipal disposal landfills, given that there are otherwise incentives for companies—and we’ve heard the supplementary paper refer to this as well. The ministry has acknowledged the concerns, from some submitters in a previous round of consultation, that some people might reclassify waste that should be going to class 1 landfills as construction and demolition waste so that it goes to class 2 landfills.

That is significant. Many class 1 landfills, except those that are too small to qualify, are required to have landfill gas capture technology, and class 2 landfills are not required to have that technology, which means that this rate differentiation may in fact create perverse incentives for people to reclassify their waste so that it goes to the class 2 landfills. And I’m sure that all the members of this committee who care about a clean, green Aotearoa would agree that that would be a really bad outcome from this bill. So I’m just curious as to whether there’s been any analysis or any advice done on that.

Also, because we have not had the opportunity to go to through a select committee process and there’s not been an opportunity for people to submit like they usually would, I just want to make sure I get on the record, in the Hansard, some of the stakeholder views on what the increase in this levy fund could be used for. I refer to paragraph 63 on page 14 of the supplementary analysis report. When asked what the levy revenue should be spent on, a majority of respondents indicated a preference for funding waste infrastructure, followed by compliance monitoring and enforcement and behaviour change activities—mentioned by nearly one-third of submitters. Approximately 25 percent of the submitters responded that the levy revenue should be able to be spent in line with the waste hierarchy or the top end of the waste hierarchy.

So the top end of the waste hierarchy is focused on avoiding waste altogether. The middle layer is spent on recovering waste so that we at least get some value from the waste that we do generate. And the bottom is the worst kinds of activities, which is disposal either to landfill or even below that, disposal to skyfill, which is waste incineration, which is the worst of the bunch.

The stakeholder views go on to describe how there were no comments in relation to spending levy funds on managing waste from emergency responses and no comments on administration of what the other things should be spent on. I’m aware that I’m straying a little bit back to Schedule 1, so I’ll make sure that I park myself back into Part 2 and reiterate the questions I had around how the levy rate affects New Zealand’s ability to impact our climate targets, both domestic and international commitments, under the nationally determined contributions.

Also, the new question that I asked in this area was: was there consideration or advice or any thinking around the desire to equalise the levy rates for class 2 and class 1 landfill, given the potential to create perverse incentives if these are not aligned?

Thank you, Mr Chair, for giving me the ability to take a call. I do actually want to speak to both Schedule 2 and the tabled amendment in the name of Kahurangi Carter.

It’s really important that when Parliament goes through the process of either increasing taxes or increasing levies or imposing levies or taxes, there is some assessment of where the incidence of that burden lands. There is no regulatory impact statement in relation to this bill. However, I’m looking for the impact of where the incidence of this increased levy lands. I looked in the supplementary analysis report, and pages 16 to 17 have some brief comments as to the different sectors and the impact of increased levies on them—or increased taxes—and how it would impact them. The reason why I just want to step through those different sectors is because I think it’s important to provide some understanding as to where the Labour Party will vote in relation to Kahurangi Carter’s tabled amendment.

If you go to paragraph 75 of the supplementary analysis report, the first group that it looks at is “Landfill site operators, who would need to pay the higher levy costs. However”, the statement continues, “this is expected to” pass through costs on to others. So in some cases, where there is a substantial competition, some site operators may find it harder to pass all the costs on.

So then the question is: well, if there are less site operators, what’s the impact if there are less site operators because of the increased charges set out in Schedule 2 and proposed in the tabled amendment? Does that mean that we’re going to end up with more dumping of waste—construction waste or other waste; household waste—on to public sites? Because the incidence of the burden of this increased tax falls on those site operators where there is a lot of competition. They’re not able to pass the cost on, so, therefore, there will be less site operators.

The next sector that the supplementary analysis report goes through is “Producers/disposers of waste … households, businesses, and territorial authorities. Overall, the increases to levy rates are estimated to raise an additional $171 million in revenue between 2025/26 and 2027/28”. That’s compared to what would apply from 1 July 2024, so that’s quite substantial—$171 million. I haven’t calculated how much the amount would be given under the tabled amendment, but I would say, given that the construction and demolition disposal facility is recommended at $90 per tonne from $27.70 per tonne for managed or controlled field disposals and then 75—sorry I’m just reading what Kahurangi Carter’s tabled amendment says—it would be considerably more revenue that’s collected by the Crown.

But, again, going back to the landfill site operators, there may be less of them. They won’t be able to pass the operations on, so, therefore, there are just some concerns raised there about actually increasing it way too much, which is covered within the tabled amendments.

The statement also says that the “Impacts on households: while households will likely face some cost increases, this will vary depending on how territorial authorities and landfill operators charge for rubbish collection.” So we already know, right now, that local authorities are having difficulty in basically meeting their everyday operational and capital costs, hence why we are seeing soaring rates increases across the country.

For example, I’m not too sure what the Bay of Plenty increase is—I know in Porirua it’s around 17 percent and 8 percent the next year. But, obviously, depending on where it is in the country, the increases in the rates—basically this impact assessment says that it’s likely that that cost will be absorbed by those territorial authorities. But I don’t think that that’s actually going to happen, because local authorities are already telling us that they have a huge increase in rates. So the statement goes: this would be a $3 plus GST increase across the period per trailer load.

Then it goes on to the next section, “Impacts on construction and demolition and development”. Now, this is a really key part for me because the construction sector is the second largest employer in my electorate of Mana. We are already having an economic slowdown. The construction industry is already on its knees because the Government has slowed down buildings of houses, hospitals, and schools. However, what this bill then does is increase the cost in Schedule 2 for the construction, demolition, and development sector—[Bell rung] Mr Chair?

CHAIRPERSON (Teanau Tuiono): The Hon Barbara Edmonds.

Hon BARBARA EDMONDS: I’ll sum it up really quickly. So, what this talks about is that based on estimates of how much waste is produced during construction of a new-build house, levy costs for waste disposal could increase by $46 per house, while levy costs for disposal of materials from a typical house demolition could increase by around $206. Schedule 2 looks at increasing the cost for the typical house demolition to around $206.

So my question, really, is to the Minister—I’m sure the Ministry for the Environment would have given careful consideration about those incentives; they would have recommended an amount where you didn’t want people incentivised to dump into public sectors. But I just want to check with the Minister in relation to the tabled amendment by Kahurangi Carter. Was there any advice she received in relation to higher than what she has proposed in Schedule 2? Because I think that’s an important consideration for us in the Labour Party as to whether we would support that amendment. I know the Minister doesn’t have to do it, but we are really concerned about the increased cost to the construction sector—in particular for a house build that’s going to increase from $46 per house to $206 per house, so three times the cost.

If the Minister can just provide a bit of clarity as to whether they considered anything higher than the $45, which is in Schedule 2, from 2027, and, if not, then we can see whether we can support the tabled amendment or not. Thank you.

I move, That debate on this question now close.

Thank you, Mr Chair. Further to the points being made by my colleague Barbara Edmonds, this is the sort of really useful conversation that I would have hoped would have happened at a select committee, where we can talk about even our differences in interpretation on the progressive side of this Parliament. That’s important. That’s what a select committee does.

So, given that we’re doing that all now, I just want to note—at paragraph 79 on page 16 of the supplementary analysis report—the current proposed levy will increase the cost to households on average by a whopping $5.10 per annum—$5.10 per annum. Now, that is such a nominal increase, and that’s the current proposed $5 per tonne. In the cost of building a house—the million dollars or more that it will cost you to build a house, at least; I mean, my goodness, hundreds of thousands of dollars, millions of dollars, to build a house—we’re talking about a very nominal figure, as you just articulated, Minister, of $43, and two-hundred-and-something dollars for the cost of the demolition.

Now, think about the value of increasing the levy on those demolition wastes. As you and I all know, many of those houses that are being demolished are 1940s, 1950s, or 1960s weatherboard timber New Zealand houses—made of beautiful native timber, often—with incredible recoverable materials, like mataī floors and kauri floors. It is stuff that we, rightly, are not logging right now, although I’m a bit concerned this Government might decide to come back to native forest logging at some point. Those things are valuable materials and timbers, but if there is not a sufficient incentive for them to be properly recovered, then they don’t get recovered. If it’s only going to cost 250 bucks to dump a whole house, then why will industry find ways to recover those valuable materials. There is no away place for waste.

So that’s my question to the Minister: have you fully considered the huge benefits of increasing that levy? I’m not convinced you’ve given me an answer to that.

I’ve got one further question, which is to an earlier question. You have an assurance, I believe, that you would look at ensuring that municipal authorities—regional authorities—are able to use their component of the levy—50 percent of it—for remediation of existing landfill sites. I wonder, given that you refused to change it in the previous part, whether you could give us a verbal assurance that those—

CHAIRPERSON (Teanau Tuiono): Please engage with the Chair, not with the Minister.

STEVE ABEL: Pardon me, Chair. I wonder whether the Minister would give us a verbal assurance that municipal authorities and regional authorities will be able to use their component of the levy for remediating landfill sites, which are dotted across this nation—old landfill sites, toxic sites that are leaching waste into groundwater. Those authorities do the heavy lifting on keeping those sites cleaned and remediated. Will you give us that assurance, Minister?

I move, That debate on this question now close.