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Cabinet paper: Water Programme of Action - Consultation on policy direction

POL (04) 320, October 2004

Office of the Minister for the Environment

Cabinet Policy Committee

Proposal

1. This paper identifies preferred policy directions for improving water management and outlines a proposed process for public consultation. This paper seeks approval to begin consultation by release of a discussion document. It also seeks approval for release of technical working papers that provide the background for the discussion document.

Executive summary

2. Initial projects in the Water Programme of Action have been completed. The projects addressed issues regarding water allocation and use, water quality and identification of potential water bodies of national importance. From the range of options considered in the projects, a preferred package of actions to improve freshwater management has been identified as a focus for consultation.

3. Some potential approaches will be seen as controversial by stakeholders. However a full and open consultation process is proposed to allow the implications, benefits and risks of different arrangements to be more fully evaluated.

4. Subject to Cabinet approval, consultation will be based on the attached discussion document, to be released in December 2004, supported by a series of meetings with local government, Māori, stakeholder groups and the general public in February/March 2005. The outcomes of consultation will be reported back to Cabinet in May 2005.

Background

5. In June this year I reported to Cabinet on progress with initial projects in the Water Programme of Action [POL Min (04) 14/11 refers]. At that time I signalled that public consultation was planned on the issues and options identified in the initial projects.

6. The initial projects, on water allocation and use, water quality and potential water bodies of national importance, have now been completed. The output of the initial projects has been described in technical working papers. Consultant reports on issues and mechanisms available for managing fresh water have been made available to the public.

7. Meetings have been held with the programme’s Māori Reference Group and Stakeholder Reference Group [Interests represented in the Stakeholder Reference Group include recreation, agriculture, horticulture, environmental groups, irrigation, hydro energy generation, industry, business, forestry and the hydrological and limnological societies] to ensure their concerns have been identified and, where possible, reflected in policy development. Links with the Resource Management Act review have been identified and taken into account in developing a preferred package of actions for the Water Programme of Action.

8. A vision, objectives and principles for freshwater management have been developed, as described below.

Diagram showing vision, objectives and principles for freshwater management.
[View vision, objectives and principles diagram at its full size (including text description)]

9. In line with the principles of the Sustainable Development Programme of Action, I consider it is now appropriate to seek input from the community on issues and directions identified before further development of mechanisms for change.

Output of initial projects

Water allocation and use

10. The Water Allocation and Use project considered approaches that could be taken to result in an allocation process that would:

Enable sound decisions to be made about how much water should remain in water bodies and how much can be abstracted
Lead to allocation and facilitate reallocation of abstracted water to uses with the highest environmental, social, cultural and economic values, taking into account present and future needs in a fair and equitable way
Encourage technical efficiency in the use of water.

11. Potential approaches discussed include both regulatory and market-oriented components. Benefits and risks of the various components were identified. No single component would provide all the aspects of a desirable allocation process on its own, but a mix could be developed to provide a robust package.

Water quality

12. The problem addressed by the Water Quality project is a lack of effective management of diffuse discharges of contaminants to land in some catchments, which contributes to poor water quality, especially in lowland rivers and lakes. Diffuse discharges are particularly a feature of the rural environment, as discharges in the urban area are more commonly concentrated at a specific point and controlled by resource consents. In addition, only 3% of the length of New Zealand’s rivers flows through urban areas. For these reasons, the project focused on the impacts of rural land use, while noting that some issues for urban land use are likely to be similar and may be considered in future processes.

13. It was identified that a good water quality management framework would need to include actions to provide strategic direction, clear roles and effective partnerships, effective consultation, information, research and technology, appropriate management tools, community awareness and sufficient capacity to achieve improvements. A range of potential actions that could be taken in each of these areas was identified.

Potential water bodies of national importance

14. This project sought to develop and test methodologies for determining what water bodies (including lakes, rivers, groundwater aquifers and wetlands) might be considered of national importance for a range of values. This initial work is intended to contribute to wider consideration of the national interest in water.

15. Separate methodologies were developed and initial lists of candidate water bodies of national importance were identified for irrigation, energy generation, tourism, recreation, natural heritage, industrial and domestic values [This outcome differs from that specified in the Sustainable Development Programme of Action, which is that “water bodies with nationally significant natural, social or cultural heritage values are protected”. Securing economic values has subsequently been included as an outcome, to ensure the project is consistent with a sustainable development approach.]. A methodology was also developed for determining potential water bodies of national importance for cultural and historic heritage values, but further work is necessary to compile a list of these. The range of potential uses identified for the information included contribution to local decision-making processes, development of national direction or priorities, and partnership approaches to securing values. Water bodies were not identified for Māori cultural values due the difficulty in combining Māori cultural perspectives and national perspectives when Māori culture is whanau, hapu and iwi based. Because of this, Māori cultural values associated with water bodies are more appropriately addressed through processes at the regional level.

16. Twelve sub-project reports containing specific methodologies and, in some cases, illustrative lists of potential water bodies of national importance were produced. One report [Waters of National Importance: Identification of Potential Hydroelectric Resources] has been made public under the Official Information Act. The other sub-project reports will also be made available before consultation begins so that it is clear that a balanced approach, considering all aspects of sustainable development, has been taken.

Actions proposed

17. Arising from the initial projects, eight key issues have been identified:

National and regional strategic planning for water management could be improved. No national outcomes for water have been set. Regional councils make allocation decisions largely in response to adverse effects on the environment.
Setting environmental bottom lines and allocation limits is costly and contentious
Water is over-allocated in some catchments, is not consistently allocated to its highest value use over time, and can be wasted
There is tension between investment certainty and planning flexibility. It is difficult to strike the right balance between providing existing users with sufficient certainty, and retaining enough flexibility to manage environmental risks.
There are opportunities to improve Māori participation in water management where they have an interest
Nationally important values are not consistently addressed. National issues are addressed as they arise, rather than as part of a strategic approach across the country.
There is a lack of effective action in the management of diffuse discharges of contaminants on water quality, in some catchments.
Development of water infrastructure is not keeping pace with demand

18. A preferred package of actions has been developed for the purposes of consultation to address these issues. The package aims to enhance the current system. It confirms that local government will retain the management and decision-making for freshwater, but with greater support and direction from central government. The preferred package comprises thirteen proposed actions as follows. [Actions considered but not included are listed in Appendix 1. Some of these are alternatives to the preferred actions; others are complementary.]

Develop National Policy Statements that specify national priorities for freshwater, stipulate requirements of regional plans, and require catchment-based targets for water quality to be set. Proposals under the RMA review seek to strengthen national direction through developing National Policy Statements.
Develop National Environmental Standards to specify methods or procedures for setting environmental bottom lines and allocation limits, and to address the management of diffuse discharges [This action does not include setting nationally consistent default values for water quality]. Proposals under the RMA review seek to strengthen national direction through developing National Environmental Standards.
Address nationally important values by identifying water bodies with such values and making this information widely available, and by prioritising for action water bodies with nationally important values that are under threat. These steps may require new tools to be developed and changes to the RMA, for example an examination of the current Water Conservation Order provisions.
Increase central government participation in regional planning. This could include providing information and guidance, and lodging submissions by either individual departments or through the whole of government process being developed under the Resource Management Act Review.
Increase central government support for local government by capacity building or disseminating good practice for: strategic planning processes for freshwater; setting environmental bottom lines and allocation limits; engaging effectively with Māori (consistent with the Resource Management Act review); managing clawback and transfer of water permits; and enhancing efficiency of water use.
Develop special mechanisms for regional councils, including powers to progressively constrain (clawback) existing consents to take water or discharge contaminants where water is over-allocated or water quality is declining.
Enhance the transfer of allocated water between users. Mechanisms could include developing a pilot registry system which regional councils could choose to use to record water transfers, and working with local government to encourage greater consideration of transfer of water.
Develop market mechanisms to manage discharges, including mechanisms to trade permissions to discharge particular contaminants.
Set requirements for regional freshwater plans to address key issues and challenges in areas where water resources are under pressure, and promote the implementation of regional plans to also be reflected in long-term council community plans required under the Local Government Act 2002 [The recent Resource Management Act review partially addresses this action through allowing the Minister for the Environment to require a natural resource allocation plan to be prepared.]. Key issues may include water allocation and quality, addressing the national interest in water and exploring the development of infrastructure.
Enhance Māori participation where they have an interest, by strengthening involvement of Māori in national and regional strategic planning and providing central government support for better engagement consistent with the Resource Management Act Review.
Enable regional councils to allocate water to priority uses by allowing applications for resource consents to be heard on a comparative basis, allowing regional councils to identify priority uses for water and develop criteria to guide decision making on the allocation of abstracted water [For example, criteria could be developed that specify a minimum efficiency in a catchment.], and allowing regional councils to use market tools (eg tendering, auctioning) as one of the ways of allocating water within the comparative framework.
Raise awareness of freshwater problems and pressures, and promote solutions for managing the impacts of land use on water quality, over-allocation and inefficient water use. This could include communication and education programmes, and development of voluntary agreements.
Work with local government, scientists and key stakeholders on pilot projects to demonstrate and test new water management initiatives. (Current pilot projects include Lake Taupo, Lakes Rotorua/Rotoiti, and the Waitaki catchment.) This could include multi-disciplinary scientific programmes that take an integrated approach to water management issues, from on-farm to catchment level.

19. I propose that this package be presented during the consultation process as the preferred Government direction. The package:

Addresses the eight key issues identified above
Provides opportunities for leadership, prioritisation and working with local government
Supports and builds on the Resource Management Act Review
Provides an integrated and strategic response.

Actions (iii), (vi) and (xi) may require changes to legislation.

Public consultation process

20. A public consultation process on the issues and options identified in the Water Programme of Action is planned. The purpose of the consultation is to:

Ensure the real problems have been identified
Identify the level of support for the preferred policy directions and alternative approaches
Identify perceived benefits and risks of potential directions
Inform further work on preferred directions
Increase public awareness in preparation for later consultation on specific tools for improved freshwater management.

21. A discussion document to stimulate public feedback on the issues and proposed directions has been prepared and is attached. The preferred package of actions is identified, but the document also makes it clear that the process is open and that all ideas will be considered. An invitation to make written submissions is included. I recommend that the discussion document be released to the public in early December this year for consultation, after incorporation of any changes necessary for editorial purposes. I recommend that Cabinet delegate authority to me to make any such changes, in consultation with the Minister of Agriculture.

22. While the discussion document contains sufficient information to initiate discussion some people will wish to see more detailed analysis of issues and options. To enable this, I recommend that the technical working papers from the water allocation and use, water quality and water bodies of national importance projects be made available.

23. To follow up release of the discussion document and allow further opportunity for feedback, a series of meetings is planned to take place in February/March 2005. In order to involve the full range of people with an interest in water issues this will include public meetings in regional centres as well as meetings with local government, iwi and stakeholder groups.

24. Feedback from meetings and written submissions will be collated and the outcomes of consultation will be reported to Cabinet. The report will be submitted in April 2005 to enable Cabinet to consider it in May 2005. To achieve this, the latest practical closing date for submissions is 18 March 2005.

Risks to be managed

25. The risks discussed here are those associated with release of information and the consultation process. Risks associated with adoption and implementation of particular actions cannot be fully explored without the benefit of public feedback. Such risks will be further assessed following consultation.

26. Potential risks associated with release of information and with consultation arise from two sources: strong positive or negative views about possible policy directions, and perceptions that a particular direction has already been set and that other ideas will not be considered. Both of these risks can be managed by running an open consultation process. It is important that consultation is supported by information about the full range of possible approaches. This will help to give participants confidence that the benefits and risks of different approaches are being identified and considered.

27. While participants in consultation should feel able to comment on the full range of possible approaches, identification of the preferred package of actions will make it clear that the government is taking an integrated and balanced approach.

28. Particular policy directions that are likely to be controversial have been identified:

Management of diffuse discharges from land use is likely to be controversial, as limits may be placed on what people can do on their land (for example, intensification of land use may be limited) in some catchments. Management of diffuse discharges has been identified as the priority water quality issue to be addressed under the Water Programme of Action. Careful management of the process and content of the proposed National Environmental Standard for managing diffuse discharges is likely to partially address this risk.
Development of special mechanisms to constrain existing consents where water is fully allocated or quality declining is likely to impact on existing users of water, including through increased uncertainty [The Resource Management Act review includes actions to reduce uncertainty for existing users in the consent renewal process.]. An alternative would be to limit policy to managing new users, and the existing consents could be left to run their course. These alternatives can be examined fully following feedback from consultation. If mechanisms are not provided, improvements in over-allocated catchments will be delayed.
Introduction of tools that are perceived as charging for water will result in the issue of ownership of water being raised by iwi and some other stakeholders. The preferred package enables decisions about whether or not to use such tools to be made at the regional level, taking into account local views and the specific pressures and issues associated with particular water bodies.
The water bodies of national importance sub-projects represent initial work only, and some are incomplete. In the attached discussion document the sub-projects have been referred to as preliminary work that identifies possible ways of identifying water bodies with nationally important values. Final outcomes are likely to differ from the initial lists following public consultation. Release of initial lists may raise public expectations that the values identified for particular water bodies will be secured, and may result in speculative behaviour. However there is no guarantee that the particular values currently indicated for individual water bodies will be protected. This risk can be managed by making the status of the information clear when it is released.
Any changes to the current management system are likely to require transition mechanisms. Effective transition mechanisms will be developed with the tools, later in the programme.

29. The agreed timeframe for reporting to Cabinet imposes constraints on both the submission process and the analysis of submissions. The submissions process will run from release of the discussion document in December 2004 until the middle of March 2005. This results in a two week period between the end of public meetings and the close of submissions. There is a risk that people will feel they have not been given adequate opportunity to digest the material and provide input. This risk can be managed by a communications strategy advising that the discussion document is widely available and that it is the key consultation document, with the meetings an avenue for refining, rather than forming, ideas.

30. The timeframe allows two weeks to incorporate assessment of submissions in the paper to be prepared for Cabinet. This imposes a constraint on the ability of officials to analyse submissions fully. This will be mitigated by encouraging early submissions from key stakeholders and streamlining the process for assessing submissions. However it will only be possible to report on key issues in April 2005, with more detailed analysis to be undertaken as part of development of proposals for change.

31. The timing of consultation meetings coincides with timing currently proposed for consultation on the foreshore and seabed, aquaculture and Resource Management Act reviews. There is a risk that this could create confusion about the purpose and scope of the Water Programme of Action consultation as well as consultation fatigue as similar sectors will be involved in both processes. The risk of confusion can be managed by ensuring that the communications strategy provides appropriate direction for people as to where particular issues will be addressed.

Next steps

32. The Cabinet paper to be submitted in April 2005 for consideration by Cabinet in May 2005 will report the results of public consultation discussed above. Work will then proceed on developing specific policy proposals.

33. Officials are proposing a second phase of consultation on specific proposals for improving freshwater management. Details of the scope, process and timing of the second phase of consultation will be considered following evaluation of the first consultation phase. Approval will be sought from Cabinet prior to the second phase.

Consultation

34. The following government departments have been consulted in the preparation of this paper and their views have been taken into consideration: Ministry of Agriculture and Forestry, Ministry of Economic Development, Department of the Prime Minister and Cabinet, the Treasury, Te Puni Kokiri, Department of Conservation and Department of Internal Affairs. Representatives of local government have also been involved in drafting this paper.

Financial implications

35. The recommendations of this paper have no immediate financial implications. Changes to the arrangements for the management of freshwater may, however, have fiscal implications in the medium term.

Human rights

36. There is no inconsistency between the proposal and the Human Rights Act 1993.

Legislative implications

37. The recommendations of this paper have no legislative implications. Further development of proposals for change may require legislative change in the future.

Regulatory impact and compliance cost statement

38. A regulatory impact and business compliance cost statement is not required at this stage.

Publicity

39. The proposed discussion document is attached. The discussion document and consultation opportunities will be widely publicised. I recommend that the Minister of Agriculture and I be given authority to approve a communications strategy and to issue a press release to announce the consultation process and release of the discussion document and three technical working papers.

Hon Marian L Hobbs
Minister for the Environment

Attachments:

Appendix 1 — Actions considered but not included in preferred package

Proposed discussion document “Freshwater for a sustainable future: issues and options”

Cabinet decisions

On 3 November 2004 the Cabinet Policy Committee:

Background

1 noted that the Water Programme of Action, which is one component of the Sustainable Development Programme of Action, has three work streams: water allocation and use, water quality and water bodies of national importance;

2 noted that a full range of potential solutions for improving freshwater management has been developed through the water allocation and use, water quality and water bodies of national importance projects;

3 noted that the potential solutions are identified in the public discussion paper and three technical papers attached to POL (04) 320;

4 noted that the potential preferred direction is set out in paragraph 4;

Preferred direction

5 agreed that the preferred direction include:

5.1 development of national policy statements;

5.2 development of national environmental standards;

5.3 addressing nationally important values;

5.4 increasing central government participation in regional planning;

5.5 increasing central government support for local government water management;

5.6 development of special mechanisms for regional councils;

5.7 enhancing the transfer of allocated water between users;

5.8 development of market mechanisms to manage discharges;

5.9 setting requirements for regional freshwater plans to address key issues and challenges;

5.10 enhancing Māori participation consistent with the Resource Management Act review;

5.11 enabling regional councils to allocate water to priority uses;

5.12 raising awareness of freshwater problems and pressures, and promote solutions;

5.13 working with local government, scientists and key stakeholders on pilot projects to demonstrate and test new water management initiatives;

Managing risks of consultation process

6 noted that the following risks associated with the consultation process will require management:

6.1 discussion of tools that are perceived as charging for water will result in the issue of ownership of water being raised by iwi and some other stakeholders;

6.2 confusion and potential consultation fatigue may arise from concurrent consultation on other related Government programmes;

6.3 potential controversy may exist around some policy directions;

6.4 the timeframe for consultation will impose constraints on the opportunities to lodge submissions;

6.5 the timeframe for reporting back to Cabinet imposes constraints on the time available for analysis of submissions;

Release of discussion document

7 agreed that the Minister for the Environment initiate the consultation process and release the discussion document “Freshwater for a sustainable future: issues and options”, attached as Attachment 1 to POL (04) 320 in December 2004 for public comment;

8 authorised the Minister for the Environment, in consultation with the Minister of Agriculture, to approve any minor editorial changes necessary prior to public release of the discussion document;

9 agreed to make the technical working papers, attached as Attachments 2, 3 and 4 to POL (04) 320, arising from the water quality, the water allocation and use, and water bodies of national importance projects, publicly available;

10 noted that reports describing specific methodologies for identifying potential water bodies of national importance for irrigation, energy generation, tourism, recreation, natural heritage, cultural and historic heritage, industrial and domestic values, and background information on Māori cultural values, prepared for the water bodies of national importance project will be made publicly available;

11 noted that the contents of the submission under POL (04) 320 will be made available to the public at the same time as the discussion document;

Communications

12 agreed to a series of consultation meetings with local government, Māori, stakeholders and the general public on the issues, options and preferred directions for improving freshwater management, to take place in February/March 2005;

13 authorised the Minister for the Environment and the Minister of Agriculture to approve a communications strategy and to issue a press release to publicise consultation on the Water Programme of Action;

Next steps

14 invited the Minister of the Environment, in consultation with other Ministers as appropriate, to submit a further paper to the Cabinet Policy Committee in April 2005, to report on the outcome of consultation;

15 agreed that the Ministry for Culture and Heritage should be consulted on future related papers, including the paper referred to in paragraph 14;

16 noted that a second phase of consultation is proposed by officials and that the scope, process and timing of this will be developed following evaluation of the first consultation process;