Report of the Ministry for the Environment for the year ended 30 June 2006

1 Overview

2 Statement of Service Performance for the Year Ended 30 June 2006

3 Financial Statements for the Ministry for the Environment

4 Non-Departmental Schedules

5 Environmental Report

6 Management of the Ministry

7 Contact Information

1 Overview

Chief Executive's Overview

Statement of Objectives

Minister's Priorities for 2005/2006

The Year in Review

Chief Executive's Overview

New Zealanders, rural and urban, relate personally to our environment. Although the majority of us are city dwellers these days, we are still a people of the land. The beach, the bush, the mountains, lakes and rivers are part of our national identity. It is these, as much as our cities and towns, that feel like “home” when we think of New Zealand.

The environment is hugely important to New Zealand’s economy as well as to our quality of life. Tourism and primary production rely not just on our environment, but on a high-quality environment. Our use of the terms “clean green image” and “100 percent Pure New Zealand” shows that environmental quality is a major competitive advantage in the world today.

The Ministry for the Environment strives to provide environmental leadership and encourage effective decision-making at all levels so that we and others can deliver the environment that New Zealanders expect and deserve. This annual report describes the work of the Ministry for the Environment over the past financial year. To mention just a few of the achievements:

• The Year of the Built Environment 2005, an initiative with partner organisations to raise public awareness of the impact of the built environment on our quality of life, exceeded our expectations. More than 200 activities were held, including the Urban Life art competition which attracted 360 entries, and the Open House at 50 inspiring buildings and spaces.
• The Sustainable Water Programme of Action reached a major milestone with government agreement on a strategy to protect and improve our freshwater resources into the future. We also shepherded in a workable and efficient regional water allocation plan for the Waitaki Catchment, developed by the Waitaki Catchment Water Allocation Board.
• We continue to encourage environmental initiatives by industry. This year we worked with partners to produce a toolkit for the screen industry, guidelines for the offshore petroleum industry, and fact sheets for the panel beating industry, while continuing our support for the Packaging Accord and the Dairying and Clean Streams Accord.
• The review of New Zealand’s climate change policies has led to a series of work programmes to help guide decisions on the short and long-term policy direction for climate change.
• Forty-five students from around New Zealand gained hands-on experience with environmental projects and inspiration for further action during the week-long Sir Peter Blake Youth Environment Forum.
• Plans for publishing regular and accessible environmental reports are well advanced. We aim to provide updates on key environmental issues, such as water and air quality and climate change, in ways that are useful to our key audiences.

On the domestic front, the 2005/06 financial year was a year of change for the Ministry for the Environment – apart from a new building, the Ministry had two new Ministers and a new Chief Executive. In the short time I have been at the Ministry, I have found it to be an organisation in good health, full of bright and enthusiastic people with a real will to make New Zealand a great place to live.

Hugh Logan
Chief Executive

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Statement of Objectives

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Minister's Priorities for 2005/2006

The Government’s key priorities relevant to the environment are to:

• protect and enhance the environment
• grow an inclusive, innovative economy for the benefit of all
• strengthen national identity and uphold the principles of the Treaty of Waitangi.

The priority environmental issues for the Ministers in 2005/2006 were:

• freshwater initiatives, including:
  • Sustainable Water Programme of Action
  • lakes
  • Waitaki
• the Flood Risk Management Review
• Water Efficiency Labelling System
• reporting on water policy frameworks
• reporting on Dairying and Clean Streams Accord
• climate change policy
• the Greenhouse Gas Inventory
• the greenhouse gas projections and net position report
• the carbon accounting system
• science priorities – climate change
• the passage of Hazardous Substances and New Organisms (Approvals and Enforcement) Amendment Bill
• the Year of the Built Environment 2005
• reporting on air policy frameworks
• product stewardship
• reporting on waste policy frameworks
• sustainable industries
• Minimum Energy Performance Standards
• lead the negotiation and implementation of environment provisions in New Zealand trade agreements
• reporting and monitoring framework
• the Youth Environment Forum.

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The Year in Review

Priority issues

Freshwater Initiatives

Sustainable Water Programme of Action

In New Zealand, freshwater is fundamental to our way of life. Our rivers, lakes, streams, wetlands and groundwater systems are amongst our most valued natural assets – not only for their natural beauty, but for the many recreational, economic and cultural activities they support. Yet due to changing land-use patterns, changes in demand and other factors, this key resource is under pressure and the Government is looking at the management of freshwater – now and into the future.

Throughout the year, good progress was made towards alleviating this freshwater management issue. In 2005, the Ministry organised meetings and hui throughout New Zealand to discuss the problems facing the water management framework, and to identify possible solutions. The extensive consultation process led to more detailed investigations and evaluation of the current management system. Drawing on that work, a report to Cabinet was prepared in early 2006 that resulted in the Government identifying three national outcomes for freshwater and a package of initiatives designed to achieve the desired outcomes.

Lakes

The Government has confirmed funding of $36.7 million towards an $81.5 million programme to improve Lake Taupo’s water quality. Environment Waikato and the Taupo District Council have committed to funding the balance. During 2005/06, the Ministry worked with the councils to finalise the administrative arrangements for the programme. A formal council joint committee comprising representatives from Environment Waikato, the Taupo District Council, the Tuwharetoa Māori Trust Board and the Government (Ministry for the Environment) was established to provide a governance framework for the programme. Interim Trustees were appointed to the proposed Lake Taupo Protection Trust pending formal agreement to the project documentation that will set up the formal funding arrangements between the Government and the Joint Fund. During 2005/06, Environment Waikato publicly notified its proposed regional planning rules which will cap nitrogen emissions in the Lake Taupo catchment. The Ministry made a joint submission with Te Puni Kokiri on the proposed regional plan variation and presented evidence to the plan hearing in Taupo.

Cabinet agreed as part of the 2005/06 budget package to an appropriation of $4 million as the Government’s 50 percent contribution to Environment Bay of Plenty’s programme to improve the water quality of Lake Rotoiti (one of the Rotorua lakes). The funding is for the construction of a diversion structure in Lake Rotoiti. Environment Bay of Plenty was granted resource consents for the structure in late 2005. The decisions were appealed to the Environment Court and a hearing was held, with a decision now pending. During the year, the Ministry continued to work with the local authorities (through the Rotorua Lakes Strategy Joint Committee), landowners (through the Rotorua Lakes and Land Trust’s Sustainable Management Fund project) and the science community (through Waikato University’s research programme funded by The Foundation for Research, Science and Technology).

Waitaki

The Government established the Waitaki Catchment Water Allocation Board in September 2004 with the function of preparing a regional plan for the allocation of water from the Waitaki Catchment by 30 September 2005. During the 2005/06 year, the Board concluded six weeks of hearing of 1,197 submissions in Oamaru and Omarama before approving its final plan on 30 September 2005, meeting the timeframe established by the legislation.

An appeal to the High Court on points of law was considered by the Court in June 2006 and determined in July 2006. The regional plan was approved with agreed amendments.

Flood Risk Management Review

In 2004, large floods swept through the lower North Island and the Bay of Plenty. The wide-scale damage and costs prompted the Government to undertake a review to ensure New Zealand has a robust approach to managing flood risk.

In the first year of the review, good progress has been made. Seventeen case studies of councils in higher risk areas were completed to understand the approaches of, and difficulties faced by, local government. The work programme to understand whether practitioners’ science needs are met by the science sector has been completed. In addition, work has also started around analysis of the current legislative framework and whether warning systems are effective.

Water Efficiency Labelling

Water efficiency labelling (WELS) is primarily a consumer information labelling system describing the consumption characteristics of specified water-using equipment. It has been mandatory in Australia since July 2006, and New Zealand has committed to mandatory labelling beginning on 1 July 2007. There are currently no water efficiency standards, other than for toilets. Equipment subject to labelling will include:

• toilets
• taps
• washing machines
• dishwashers
• shower heads.

Activities this year have included:

• liaising with New Zealand industry on the new scheme
• cooperating with Australian federal, state and territorial authorities to ensure the two countries are coordinated in their approach
• identifying the appropriate legislation for bringing WELS about in New Zealand
• identifying the appropriate agency for administering WELS.

Reporting on Water Policy Frameworks

The first national bathing beach report was released on the Ministry’s website in February 2006. This is due to be updated early in 2007. A series of reports was also commissioned early in 2006 to provide us with a snapshot of recent national trends in lake and river water quality and allocation. These reports are nearing completion.

An assessment of the national network of river water quality monitoring sites is nearing completion. This will identify the opportunities and limitations of the network for national reporting. This work is a major milestone in the development of an appropriate monitoring framework for reporting freshwater quality nationally.

Work to encourage best practice and improve consistency in freshwater monitoring is also ongoing. There has been continued input into the development of:

• national groundwater sampling protocols
• best practice guidelines for statistical analysis of freshwater quality data
• guidance on the use of a macro-invertebrate index for soft-bottom streams.

All three projects are due to be completed, at least to a stage where the methods can be trialled, by December 2006.

Reporting on Dairying and Clean Streams Accord

The Accord is both a statement of intent and a framework for actions to promote sustainable dairy farming in New Zealand. On 26 May 2003, the Dairying and Clean Streams Accord was agreed between Fonterra Co-operative Group, the Minister for the Environment, the Minister of Agriculture, and regional councils. The parties to the Accord agreed to work together to achieve clean healthy water, including streams, rivers, lakes, groundwater and wetlands in dairying areas.

A long-term monitoring and reporting strategy to measure progress towards the Dairying and Clean Streams Accord targets was developed and disseminated to councils. It included a five-yearly audit of water quality by the Ministry. The Ministry has deeds with four councils (Northland, Horizons, Marlborough and Tasman) to undertake catchment monitoring programmes. These are designed specifically to assess the impact of the actions being undertaken by farmers implementing the Dairying and Clean Streams Accord on a catchment scale. Council environmental monitoring staff have started to implement monitoring programmes and collect data for these catchments. This will continue in 2007 and will provide initial baseline monitoring information.

Climate Change Policy

A full review of climate change policy was commissioned by Cabinet in mid-2005. It was completed in November 2005, and, in December 2005, Cabinet decided not to proceed with the announced carbon tax and associated Negotiated Greenhouse Agreements.

The Ministry (along with DPMC) is coordinating the development of the whole-of-government work programme for climate change. This will cover communication and stakeholder engagement, a strategic framework, preparation for, and adapting to, climate change, forestry measures, transport measures, energy sector measures, agriculture and land use, development of a purchasing strategy for Kyoto-compliant emission units, international engagement, alternatives to the carbon tax, cross-sector initiatives and climate change research and technology investment priorities.

The Ministry worked within the United Nations Framework Convention on Climate Change (UNFCCC) process to help ensure that the outcomes of the Montreal Climate Change Conference in December 2005 were aligned with New Zealand’s views. The Conference adopted the rules for an operational Kyoto Protocol, agreed a framework for international cooperation on adaptation, and launched future-focused agenda items under both the UNFCCC and the Kyoto Protocol.

Nineteen councils in New Zealand, representing 63 percent of the country’s population, have joined the Cities for Climate Protection® campaign since it was launched in July 2004. The Cities for Climate Protection® campaign, is an innovative programme that supports councils to cut greenhouse gas emissions from their own activities and from their communities.

Greenhouse Gas Inventory

The development of New Zealand’s national inventory system including the Carbon Accounting System has continued this year.

New Zealand’s Greenhouse Gas Inventory 1990–2004 was submitted to the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat on 13 April 2006. Consistent with agreed good practice, the 2006 inventory submission included improvements in accuracy, transparency and completeness.

A statistical review entitled ‘Optimisation of the statistical confidence and cost effectiveness of New Zealand’s Greenhouse Gas Inventory’ was contracted in October 2005. The review noted that uncertainty was dominated by five key inputs and that for progress to be made in reducing uncertainty, a combination of these areas would need to be targeted, especially carbon dioxide removals by forests and nitrous oxide emissions from animal waste and fertiliser inputs. The key findings of the review are being incorporated into future inventory work where appropriate.

Greenhouse Gas Projections and Net Position Report

Work on the net position and greenhouse gas projections also continued this year. In October 2005, the Ministry commissioned UK-based consulting firm, AEA Technology to undertake an independent review of the May 2005 net position report. AEA Technology’s key finding was that “the methodologies employed to project emissions and sinks across the different sectors [are] generally sound and reasonable in their approach”.

The update of the projected balance of units during the Kyoto Protocol’s first commitment period (2008–2012) was based on the latest national inventory of greenhouse gas emissions and removals submitted to the UNFCCC on 13 April 2006.

Work on greenhouse gas projections to 2020 was undertaken for inclusion in New Zealand’s 4th National Communication to the UNFCCC.

Carbon Accounting System

The development of the carbon accounting system continued this year with key achievements including the approval of the system and associated funding by Cabinet through to 2014/15. The main components of the carbon accounting system include:

• methods and processes for establishing representative forest and soil plots to obtain measurements from which carbon estimates will be derived
• methods, processes and models to determine levels of carbon in New Zealand forest and soils
• methods and processes to map land use and land-use changes (from 1990) and acquisition of the required remotely-sensed imagery
• development and deployment of a database, application tools and related infrastructure to enable the storage, analysis and reporting of data related to land-use changes and carbon stocks in forest and soils for these areas
• processes for the design, review and refinement of statistical design, spatial analysis and land-use mapping methods to ensure robustness, effectiveness and cost efficiency
• processes for quality assurance and conformance with IPCC Good Practice Guidance, including the management of international expert reviews.

In late 2005, an informal international review concluded that the carbon accounting system had been well designed, and that, if implemented accordingly, it would meet good practice guidance associated with the Kyoto Protocol.

Science Priorities – Climate Change

Following the Climate Change Policy Review by Cabinet, climate change work programmes were re-prioritised. A climate change research and technology work programme has been established to identify gaps and prioritise climate change research and technology investment.

The Ministry has helped facilitate New Zealand’s participation in the activities of the Intergovernmental Panel on Climate Change over the past year.

Passage of Hazardous Substances and New Organisms (Approvals and Enforcement) Amendment Bill

This piece of legislation was passed in December 2005. It brought into existence the concept of Group Standards for hazardous substances, for example, the Cosmetics Group Standard. Group Standards can be applied to substances with similar properties and characteristics. Passage of this Bill was essential to enable the Environmental Risk Management Authority (ERMA) to complete the process of transferring substances from previous legislation into the Hazardous Substances and New Organisms (HSNO) management framework. This process was completed on time on 30 June 2006.

Year of the Built Environment 2005

2005 was the Year of the Built Environment – as proclaimed by the New Zealand Government in conjunction with the New Zealand Institute of Architects and a consortium of local government, industry, research and professional institutes. The Year of the Built Environment provided an opportunity to explore and celebrate our built environment – the buildings, spaces and structures in which we live, work and play. Throughout 2005, a series of collaborative events focused on and challenged people to recognise the role the built environment plays in our lives. These included:

• the ‘Open House’ event, which provided an opportunity to view some outstanding examples of buildings and sites in Dunedin, Auckland, Wellington and Christchurch
• the ‘Year of the Built Environment 2005 Awards’, which recognised projects that exemplify the quality and relationship of built forms with their environment, design innovation that enhances peopled environments, and sustainable design principles and resource use
• the Urban Life art competition and exhibition.

Reporting on Air Policy Frameworks

As part of the national air quality reporting programme, a review of the Ministry’s Global Environmental Monitoring System (GEMS) sites was undertaken. The GEMS sites include air quality monitoring in two Auckland locations and one in Christchurch. The draft report is undergoing peer review. The review will enable current monitoring to be assessed for best value and relevance to the ambient air national environmental standards.

A reporting framework for the air quality standards is being finalised using a 2005 pilot data set. This will comprise all available summary data for airsheds across New Zealand.

A draft report on the comparability of different PM10 monitoring methods is in the final stages of review. The Ministry is actively working with regional and unitary authorities to address technical monitoring issues to promote national consistency. This, and other contributions from the Foundation for Research, Science and Technology’s (FRST) ‘Protecting New Zealand’s Clean Air Programme’, will be incorporated into the Good Practice Guide for Air Quality Monitoring and Data Management.

A survey of the implementation of national environmental standards was conducted in February 2006. It provides a summary of regional and unitary authority progress in implementing appropriate monitoring in accordance with the regulations, and the development of emissions inventories and ‘straight-line paths’.

Product Stewardship

Product stewardship is a tool with the potential to greatly improve how we deal with waste. It encourages producers, brand owners, importers and consumers to help manage the environmental effects of products throughout their life cycle.

A discussion document on product stewardship was released by the Government in August 2005. There were 130 submissions received and extensive consultation with industry was carried out. Following the submissions, five product case studies (whiteware, paint, agrichemical containers, cell phones and tyres) were undertaken. These provided valuable information for further development of the policy framework.

Reporting on Waste Policy Frameworks

Three surveys on waste management were drafted in 2006. These will be completed early in the new financial year. These surveys will give details on:

• landfill design and management – including engineering aspects and quantities of waste sent to landfills
• progress towards targets in the New Zealand Waste Strategy
• waste minimisation – current and future funding of waste minimisation and council recycling facilities.

A schedule for regular monitoring will be established for these aspects of waste management. This schedule will be consistent with the national environmental reporting framework.

Work is underway to trial the concept of waste catchments. These catchments will examine waste disposed of at all landfills within a region and provide more accurate data for waste management.

During the year, the Ministry partnered with regional councils and unitary authorities from eight regions to collect and dispose of 90 tonnes of unwanted and banned agrichemicals. These eight regions are now effectively clear of agrichemicals.

The New Zealand Packaging Accord continues to be an effective framework for joint action to reduce waste through the packaging supply chain. Product stewardship was actively pursued in five sectors (tyres, paint, mobile phones, whiteware and agrichemicals). All have carried out in-depth case studies to aid design of new schemes.

Sustainable Industries

The Ministry’s sustainable industry function had another successful year, building on the delivery of major work programmes over the last two years. In 2005/2006, progress was made with the following:

• New Zealand’s most contaminated land site, the former Fruitgrowers’ Chemical Company at Mapua, is now 70 percent remediated. The Ministry has been working with Tasman District Council and through the Contaminated Sites Remediation Fund to meet the resource consent requirements for the clean up.
• The Govt³ programme, which assists the government sector to operate more sustainably, now includes formal commitment from all 47 departments. Twenty-six agencies now have formal action plans as part of their commitment to the programme.
• Sustainable tourism continues to evolve positively with six regions actively engaged with local tourism businesses to improve their sustainability.
• Environmental best practice guidelines for filming were developed in conjunction with the screen industry. Full support has come from the 10 film-related industry associations in New Zealand, which are implementing the guidelines.There has been international interest in adopting the guidelines.

Minimum Energy Performance Standards

Minimum Energy Performance Standards (MEPS) prescribe labelling and minimum performance criteria that must be met if a product is to be sold in New Zealand. Identical requirements are in force in Australia. Under the Trans-Tasman Mutual Recognition Arrangement (TTMRA), the two countries are coordinating their requirements.

An agreed Trans-Tasman work programme was adopted to ensure that standards and labelling requirements for the two countries remain aligned. MEPS were extended to include:

• low-pressure copper thermal electric storage water heaters
• single-phase ducted air conditioners and air-to-air heat pumps
• single-phase non-ducted air conditioners and heat pumps
• storage water heaters (electrically heated)
• three-phase air conditioners and heat pumps
• three-phase cage induction motors
• tubular fluorescent lamps
• ballasts for fluorescent lamps.

Lead the Negotiation and Implementation of Environment Provisions in New Zealand Trade Agreements

The Ministry negotiated an environment agreement as part of New Zealand’s trade agreement with Chile, Singapore and Brunei, known as the Trans-Pacific Strategic Economic Partnership.

The Ministry co-chaired the first Environmental Committee meeting in Bangkok to start the implementation of the environment provisions associated with the Thailand New Zealand Closer Economic Partnership.

The Ministry led the first cooperative activity (Environmental Impact Assessment workshop) with Brunei, under the environment agreement associated with the Trans-Pacific Strategic Economic Partnership. The Ministry is also leading the negotiation of environment provisions associated with international trade agreements with China and Malaysia.

Reporting and Monitoring Framework

Work continued on a national state of the environment reporting framework with a focus on the development of:

• a core set of environmental indicators (distilled from the environmental performance indicators programme)
• use of New Zealand’s unique environmental classification systems for land, water and the marine environment which help interpret and map environmental data
• expanded information-sharing agreements that enable indicator and environmental information held by other agencies (eg, regional councils) or sector groups to be shared for the purpose of environmental monitoring and reporting, policy and performance reviewing
• a series of reporting products targeted at specific audiences.

Youth Environment Forum

The 2006 Youth Environment Forum was held in Wellington in April and was attended by 45 16 to 18 year-olds from 15 regions around the country. The Youth Environment Forum is hosted by the Ministry for the Environment in partnership with the Sir Peter Blake Trust and is open to young people with a keen interest in the environment. It provides an invaluable opportunity for them to have a voice on environmental issues and to learn first hand about environmental management.

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