• About this site|
• Site index|
• Contact us|
• Jobs

Māori Impacts from the Emissions Trading Scheme: Detailed Analysis and Conclusions

Acknowledgements

Foreword

1 Introduction

2 Māori Contribution to New Zealand Greenhouse Gas Emissions

3 Māori Economic and Socioeconomic Position

4 Likely High-Level Generic Impacts of the ETS

5 Likely ETS Impacts on Māori – Absolute

6 Likely ETS Impacts on Māori – Relative to Non-Māori

7 Summary of Findings

6 Likely ETS Impacts on Māori – Relative to Non-Māori

6.1 Electricity and liquid fuel prices

Using 2004 household expenditure data from Statistics New Zealand, the relative expenditure of Māori and non-Māori households on electricity and fuels for road vehicles is as follows.⁵¹

Table 6.1: Relative Māori and non-Māori weekly household energy expenditures

The total weekly dollar spend by Māori households for both energy sources is higher than for non-Māori – 7 per cent higher for electricity, and 12 per cent higher for liquid fuels. Similarly, the proportion of total weekly spend accounted for by each energy source is also higher, by around 30 per cent in each case (eg, 4.7 per cent versus 3.6 per cent for liquid fuels). The higher dollar spends on each type suggests – in a partial sense (ie, ignoring lower total Māori household expenditures overall) – that Māori household emissions from direct energy consumption are also higher than for non-Māori. Based on this argument Māori should expect to bear a higher absolute cost from energy emissions under the ETS. When considering the ETS’s impact on energy prices in terms of total household expenditure shares, however, Māori households will bear relatively more of a cost than non-Māori, given the greater importance of energy spend in Māori household budgets.

When comparing Māori and non-Māori household expenditures on electricity at a more disaggregated level, some other patterns emerge. For example, Māori households that rent their property spend on average 20 per cent more per week than non-Māori renter households on electricity. Also, Māori households on low to middle incomes tend to spend materially more than non-Māori households (24 per cent more for households on $37,900–58,899), although this is not the case for those on the lowest household incomes, or those on higher incomes. However, no clear picture emerges for differences depending on household composition (ie, couples only, couples with children, one parent with children, and one person per household).

When comparing Māori and non-Māori household expenditures on liquid fuels at a more disaggregated level, other patterns emerge. Fuel consumption for Māori households is 29 per cent higher for those in the highest income band, compared with non-Māori households in that band, but not otherwise apparently different based on household incomes. Similarly, liquid fuel expenditure by Māori households that are rent-free or owned without mortgage are respectively 44 per cent and 40 per cent higher than for non-Māori households in the same category, and 8 per cent higher for those households owning with a mortgage. Conversely, when looking at household composition, Māori households comprising one parent with children spend 44 per cent less on liquid fuels than like non-Māori households.

Superficially, these differences suggest there may be quite different drivers for Māori household expenditures on electricity and liquid fuels affecting their relativity when compared with non-Māori households. In terms of liquid fuels it appears that the relatively higher Māori consumption stems mainly from more affluent Māori households, perhaps reflecting a higher propensity to travel or drive larger cars than for similarly affluent non-Māori. Conversely, for electricity consumption the opposite is possibly the relevant driver – with less affluent Māori households spending more both absolutely and in terms of own-weekly total spend, perhaps due to having less ability to invest in energy efficiency (eg, due to greater renting rates and higher associated electricity spend).

These differences suggest that the targeting criteria for assistance to households to mitigate electricity price impacts from the ETS may need to recognise more than just household size, composition, income levels and tenure (ie, renting versus owning). If these ethnic differences arise for Māori, it can be speculated they will also arise for other ethnic groups (eg, Pacific Islanders), reflecting the overall socioeconomic position of each such ethnic group (ie, not just ethnicity).

6.2 Fishing

As discussed above, Māori have disproportionately high interests in the fishing sector compared with non-Māori. These interests relate to quota ownership, Māori interests in fishing companies such as Sealord (50 per cent), Ngai Tahu Fisheries, a range of other active Māori fishing companies (at the catching, processing and/or exporting levels), and Māori employment in catching and processing. Superficially, this suggests that Māori will bear a higher overall share of increased fishing sector costs from increased liquid fuel prices, and possibly also increased electricity prices (ie, for refrigeration and processing). Indeed, this greater share of emission costs should (all other things being equal) reflect a greater share of sectoral emissions from Māori-owned or operated fishing interests.

However, fishing assets comprise a greater share of the Māori asset base than they do for the non-Māori asset base (as discussed previously, agriculture, fishing and forestry account for around half of the Māori asset base, but only 11 per cent of the New Zealand business asset base overall). Hence, the relative value impact on Māori of such ETS-related cost increases will be higher than for non-Māori. The impact on Māori will also be higher due to the importance of the sector for Māori employment. Furthermore, requirements for Māori ownership of settlement quota assets under the Māori Fisheries Act give rise to institutional constraints similar to those under TTWM regarding land ownership, possibly amplifying the relative value impact of the ETS on Māori fishing interests. Additionally, while some Māori fishing concerns are owned as part of more diversified asset holdings (eg, Ngai Tahu and Tainui), fisheries settlement assets are for many iwi likely to be either their only significant assets, or a sizeable part of their asset base. Conversely, many major non-Māori fishing concerns are either owned by investors with diversified asset portfolios (eg, Sanfords), or are themselves diversified organisations (eg, Talleys). For these reasons the impact of ETS-related energy price rises may affect the value of Māori-owned fishing assets more than for non-Māori. Finally, given the agriculture and forestry sectors are to enjoy transitional government support in the form of free NZU allocations, this suggests the fishing sector, and hence Māori fishing sector interests, will face a relatively higher burden from the ETS than those non-fishing sectors.

6.3 Agriculture and forestry

6.3.1 National level comparisons

Estimated relative interests of Māori and non-Māori in farming and forestry at a national level are illustrated below.⁵²

Table 6.2: Relative national-level Māori and non-Māori interests in forestry and farming

* Data limitations mean Māori forest land interests are understated, and hence Māori farming interests are overstated.

Care must be exercised when interpreting these figures. We have no detailed data indicating the extent to which Māori and non-Māori own combined farming and forestry operations, or combine farming types. Thus, it is not possible using this data to infer the overall balance of Māori and non-Māori interests in agriculture and forestry, and hence to determine any differences between these balances for Māori and non-Māori.

With these important limitations in mind, at a national level Māori on average have a greater interest in farming than in forestry, and to a greater degree than do non-Māori. Moreover, based on earlier figures, Māori are likely to have a greater existing interest in pre-1990 forestry than post-1989 forestry (whether pre-1990 indigenous forestry is included or excluded) than non-Māori. However, Māori may possibly have a relatively greater amount of land available for potential use in post-1990 forestry than non-Māori, particularly in the Gisborne/East Coast and Northland regions, given the extent of marginal sheep and beef farming in those regions.

Assuming each farm and forest type is separately owned, Māori farmers by hectare should prefer a relatively generous agriculture treatment and post-1989 forest treatment. They should further prefer a relatively generous allocation to low-intensity and lower-valued farming types like sheep and beef, and beef farming. They should also possibly prefer the early entry of pre-1990 forestry into the ETS, and the proposed area-based free allocation of NZUs rather than value-based allocation. These preferences flow from the greater Māori interest in farming than in forestry, and in beef and mixed sheep and beef farming rather than dairying, as well as in indigenous and exotic pre-1990 forestry on lands with potentially lower (or constrained – eg, by regulation) conversion potential.

Relative to non-Māori, Māori farmers should be less eager for a more generous treatment of agriculture relative to forestry, given the relatively lower Māori interest in the former. Māori owners of post-1989 forests should be at least as interested as non-Māori in the early entry of forestry into the ETS, so carbon credit opportunities can be maximised, particularly on less developed or more marginal Māori land. They should be more concerned than non-Māori about the early entry of pre-1990 forests into the ETS, given the relatively higher share of this sector in total Māori farm land (both exotic and indigenous), and large amount of pre-1990 Crown Forestry Licensed land likely to be returned to Māori under future Treaty settlements. Māori owning pre-1990 forest land as a consequence of settled Treaty claims should have a particular interest in the issue of land value losses caused by the entry of pre-1990 forestry into the ETS.

Table 6.3 below is drawn from Table 7.4 and other data in the document The Framework for a New Zealand Emissions Trading Scheme. It augments that table to illustrate the extent to which the Government would – under the indicative scenario provided in Table 7.4 – be assuming ultimate liability for sectoral emissions, on a per hectare basis, for 2008–2025. The Government assumes that liability by either allocating free NZUs to a sector or by not devolving that liability to the relevant sector. Accordingly this table enables an assessment, however simplified, of the relative government support for each sector, over that period.

The absolute value of units covered by the Government for each sector should be interpreted in the light of the relative value impact of the ETS on associated land uses. The impact on pre-1990 exotic forest land values is likely to be greater than that on farm land values, on average, and so a higher coverage is therefore warranted if proportionate value impacts across sectors are to be aligned. A lower-valued coverage for pre-1990 indigenous forestry than for exotic forestry may be warranted if the conversion options on such lands are also significantly lower, which may be the case given restrictions on the use of indigenous forests. This may not be the case, however, where particular Māori interests such as SILNA landowners have a greater potential to change land use for pre-1990 indigenous forests, in which case a low and area-based coverage may not be preferable. Using high-level data such as this may be useful for particular landowners to assess their likely balance of preference in the light of their specific mix of different land uses.

Table 6.3: Relative sectoral support from the Government 2008–2025

* Assumes ETS covers indigenous forestry, and essentially all such forests are pre-1990.

** Assumes 90% of 37.45 Mt in 2013, and linear annual reduction in free allocation to nil by 2025. Areas from government papers and 2006 New Zealand Official Yearbook.

6.3.2 Regional level comparisons

Table 6.4 below identifies where Māori land in each of the main land-use types, as a proportion of total Māori land, is more or less than the comparable ratio for non-Māori land, for each of the six most significant regions in terms of total Māori land area.

Of the six most significant regions in terms of total hectares in Māori land, common interests are seen for four in terms of Māori having a greater share of land in beef and mixed sheep and beef than for non-Māori, with Hawke’s Bay also having a shared interest regarding its relatively high Māori interest in beef farming. All other things being equal, Māori in all of these regions should be relatively more concerned than non-Māori regarding the ETS treatment of these farm types.

Four of these six most significant regions also have a higher Māori interest in forestry than non-Māori (which possibly also holds for Bay of Plenty, given the understatement in the Māori forestry statistics). All other things being equal, Māori in these regions should be more concerned than non-Māori regarding the ETS’s treatment of forestry.

Table 6.4: Relative Māori and non-Māori interests in each main farming type for regions with most significant overall Māori land interest by area

* Māori forestry interest understated as a proportion of Māori land, and relative to non-Māori proportion in forestry.

6.4 Geothermal energy

According to the Ministry of Economic Development June 2007 Energy Data File, Māori geothermal electricity generators (Tuaropaki [94 MW capacity] and Tai Tokerau Trust [10 MW capacity]) account for 24 per cent of the total 435 MW of geothermal electricity generation capacity in New Zealand. With Māori being relatively highly represented in this sector, they are therefore relatively well-placed to profit from ETS-related rises in wholesale electricity prices.

No data is readily available regarding the relative Māori and Non-Māori ownership or use of geothermal energy other than for electricity generation. However, given the importance of this energy source for the pulp and paper sector it can be speculated that non-Māori have a greater interest in this sector. Accordingly, non-Māori should be predicted to bear the relatively greater share of ETS-related emissions costs, unless targeted relief from industrial process emissions favours non-Māori over Māori (which may be the case given the 50,000 emission unit annual threshold proposed before such relief will be considered).

6.5 Employment

Relative Māori and non-Māori employment impacts from emissions charges were discussed in Section 5.8 (see Table 5.2 and associated caveats), drawing on analysis by researchers from Waikato University. Similar Māori and non-Māori employment impacts were predicted for sheep and beef farming, dairy farming and horticulture. However, Māori employment is predicted to suffer more than non-Māori employment overall, with particularly worse employment outcomes (relative to no emissions charges) predicted for the meat manufacturing, cement and fishing (et al) sectors. Conversely, relatively strong Māori employment gains were predicted for the wood and wood products, pulp and paper, logging and forestry sectors.

[ Previous|Next