Cuts & cynical law changes: what Budget 2024 means for waste minimisation in NZ

What does Budget 2024 mean for waste minimisation in New Zealand & our national progress towards a low-waste, circular economy? Overall, not great:

• The programme to develop a national Circular Economy & Bioeconomy Strategy – one of the actions in the first Emissions Reduction Plan – has been CUT (see p. 16 of the Budget 2024 Summary of Initiatives).
• The Ministry for the Environment (MfE) Waste Minimisation budget has been CUT by $10 million (see p. 44 of the Budget 2024 Summary of Initiatives).
• The Waste Disposal Levy (colloquially referred to as the landfill levy) will GO UP beyond the increases made by the last Labour-Greens govt. The levy will increase by $5 a year, for all landfills, for three years, amounting to a $15 increase by 2027. For Class 1 landfills, the levy will reach $75 p/tonne. Continually increasing the levy is something we strongly support, but the confirmed increases still leave NZ’s levy far below comparable jurisdictions overseas (often in excess of $100 p/tonne).
• The Waste Minimisation Act 2008 (WMA) has been amended under urgency to broaden what the central govt portion of the landfill levy can be spent on, which now includes projects & activities that are unrelated to waste.

This last point – the law change – is the real kicker. The amendment bill was introduced without warning on Thursday & rammed through Parliament under urgency on Friday & Saturday, skipping the select committee stage & shutting out input from the public or the waste & zero waste sectors.

The bill is a bad law & the process for passing it was undemocratic & ensured minimal scrutiny from opposition MPs, let alone the public or affected sectors.

What has the new law changed?

The law change is a wee bit technical, but very important, so bear with us…

For background, the situation before this Bill was as follows: 50% of the money raised via the waste disposal levy went to central govt to spend on projects that “promote and achieve waste minimisation”. This was dolled out via the contestable Waste Minimisation Fund. The other 50% goes to councils to spend on local waste management & minimisation, and this remains unchanged (phew).

The essential point is that money raised from dumping waste gets recycled back to waste-related issues rather than going into the general pool of govt tax takings to be spent on whatever. This is called “hypothecation” & it’s been a critical financial mechanism in the waste sector that was hard fought for by the community when the WMA originally went through Parliament in 2006-2008. In fact, in NZ, it’s pretty much one of the only economic instruments currently used in the waste arena to drive progress towards waste minimisation.

The new law passed this weekend essentially ends this hypothecation by enabling levy money to be spent on a wider range of things, some of which are unrelated to waste.

This is a major change for the waste world & should not have gone through without consultation or warning, especially because when you remove hypothecation, it’s very hard to get it back again.

Why has the government changed how waste levy money can be spent?

The govt’s key motivation for opening up wider access to waste levy money is obviously about finding new ways of funding a bunch of the stuff it can’t otherwise get done due to its widespread cuts to public sector funding, including deep cuts to the environment budget. Essentially, the waste disposal levy is now being used as a cash cow for government environmental spending generally.

In summary: we’re dealing with a double blow of cuts to the environment & the loss of dedicated funding for waste work.

To highlight this, let’s look at three areas where waste levy money can now be spent:

1. Remediating contaminated sites. The Minister claims the money is needed for remediating closed landfills. We agree this is a fair enough use of the funds, BUT the way the new law defines “contaminated sites” is way broader than ex-landfills & would include contamination from activities that have nothing to do with landfills & waste, e.g. contamination from industrial or extractive activities like manufacturing or mining. So, money previously earmarked for waste minimisation can now be used to clean-up after polluting industries who should be cleaning up after themselves! A fine case of corporate welfare. Furthermore, given how many sites in NZ would fit the legislation’s broad definition of contaminated, this new line item alone could swallow up a major chunk of waste levy takings, diverting these funds away from waste minimisation projects…

2. Environmental projects that are unrelated to waste, eg freshwater protection projects. These projects absolutely require funding & support, but govt is using waste money to fund them because they’ve CUT previous sources of funding for these projects in other parts of the environment budget. The new law also provides no details on the criteria or decision-making process for making these allocations, the types of projects that are eligible, or other checks & balances, so it risks becoming a poorly managed slush fund.

3. To support MfE to undertake their waste-related functions & powers, including policy development, compliance & monitoring etc. Theoretically this sounds good (MfE never has enough resourcing for these tasks, even in good times); the problem is that this is core departmental work that should be covered by core departmental funding. When the WMA was initially passed in 2008, communities fought to ensure that levy money would not be used to cover this core funding. So, while govt slashes MfE’s waste budget by $10million, they’ve opened up the fund previously available to community projects for departmental work instead. As with the environment projects mentioned in point 2, the law provides no criteria, caps or decision-making processes around how MfE should approach drawing on this fund for its work.

Cynical motivations & shoddy processes = bad law

This is the first significant change to the WMA since it was passed in 2008. MANY areas of the WMA require updating & modernising. However, the hypothecation of the waste disposal levy was not one of them. The much-needed waste legislation reforms that had been painstakingly developed alongside the waste sector & community over a period of more than 6 years now sit around languishing. Meanwhile, an ill-conceived & poorly drafted Bill, facilitating a short-sighted money grab aimed at making-up for damaging cuts all over the place, becomes law virtually overnight. The long-term damage from this cynical short-termism is a slap in the face to anyone in NZ focused on waste minimisation.

If you’re interested in further details about some of the problems with this law, it’s worth checking out the Hansard transcript of the Parliamentary debates on this Bill.