WHAT’S THE BIG IDEA?

Rebuilding NZ after the pandemic

The Government has a $20 billion fund to spend on the post-Covid rebuild. Simon Wilson asks, will it have the courage to take on three new schemes to transform our country?

A more prosperous and resilient country? From business to the social sector to farming to environmentalists, there's been an outpouring of Big Ideas about how we could embrace that goal.

The Government has a $20 billion fund to spend on the post-Covid rebuild but will it take on any big new ideas? When the whole world shut down this year, the projected annual fall in greenhouse gas emissions turned out to be only 5.5 per cent. But if we want to limit global warming to 1.5 degrees, it has to be at least 7.3 per cent, every year from now until 2030. The time is now. Here are three of those big ideas. All they need is Government support, imagination and courage, writes Simon Wilson 1 Regenerative agriculture: Farming as nature intended

Farmers stop ploughing, so carbon stays in the ground. They stop irrigating, so the plants send down deeper roots. Instead of fertiliser and pesticides, they grow a wide range of nitrogen-fixing cover crops, many of them leafy legumes. Paddocks are never grazed out, so the plants still growing regenerate quickly and what gets trodden in enriches the soil.

Does it help? Evidence overseas and locally suggests that production may drop, but not nearly as much as costs. Farm profits rise, often within two or three years. On some farms, production actually rises. There’s less nitrate run-off. Much more biodiversity. Nutrient-rich food. Valuable carbon sequestration. A cleaner and healthier environment.

And more resilience against drought: with every 1 per cent increase in organic matter in the soil, a paddock can retain about 150,000 litres more water per hectare.

The animals are healthier too, and so are the humans who tend them, because of the pleasure to be found in this kind of farming. It’s good for mental health.

Welcome to regenerative agriculture, or regen ag: think of it as “farming in a way that mimics nature”.

Regen ag is already happening — though still on a small scale — all over this country, in all kinds of agricultural land use. It has its detractors and a small but growing army of enthusiasts.

It’s all about the soil. As American “grazing coach” Siobhan Griffin, who now farms in Southland, says: “I define regenerative farming as building topsoil. Simple as that.”

Conventional farming leaches goodness from the soil, so it’s replaced by fertiliser. Over time, as the soil gets more distressed, it becomes ever more dependent on the fertiliser. The land is the casualty of the process. Regen ag reverses that. Help the soil be healthy, and it will provide.

Not everyone agrees. The sceptics include two plant scientists associated with Lincoln University, Professor Derrick Moot and retired senior lecturer Warwick Scott, who have written to Agriculture Minister Damien O’Connor to warn of the “mythology” of regen ag. They say New Zealand agriculture is already world-leading and uses some of the techniques of regen ag anyway.

“We recognise that there are practices and practitioners in conventional agriculture that can be improved but consider these are minor compared with most international production systems.”

They say they “strongly reject” the idea that “conventional agriculture, as practised in New Zealand, is degenerative”.

REGENERATIVE AGRICULTURE overlaps with organic farming and other holistic approaches to land management, but it’s not prescriptive in the same way. Organic farming requires an exacting and expensive process of certification. Regen ag is an approach: farmers do what works for their land and their stock.

That makes it easier to implement but harder to define, a problem also criticised by Moot and Scott.

The support infrastructure is expanding. Consultants hold fieldays, standing in lush fields of leafy, flowering plants. There are tutorials online. Pure Advantage, a group of progressive businesses, is actively promoting the idea with research and webinars. A company called Calm the Farm offers sophisticated data analysis to create farm-management plans and match farmers with potential investors.

Regen ag has implications for trade, as global consumers ramp up their demand for “green” and “ethical” foods. One clear indicator of that: by 2025, the giant French dairy company Danone — a major rival to Fonterra — says 100 per cent of its ingredients produced in France will come from regenerative farming.

Imagine how things could change when there’s a phone app that tells you the nutrient density of the fruit and vegetables in the supermarket.

Fonterra has not made a Danonestyle commitment. New Zealand farming, in general, is not keeping up. In

July last year, 11 leading sector groups published a document called He Waka Eke Noa: Our Future in Our Hands. It’s the “primary sector climate change commitment” and it doesn’t contain a single mention of regenerative agriculture. There’s nothing on the Federated Farmers’ website either.

Since that report, though, the Primary Sector Council, representing those same groups, has made some progress with a Fit for a Better World initiative. Beef + Lamb NZ, a member of the council, is doing a global study into regen ag, hoping to identify its potential here.

THE GOVERNMENT is also moving, although not at pace. Manaaki Whenua (Landcare Research), Lincoln and Pāmu (Landcorp) all have research projects under way. O’Connor told the Otago Daily

Times recently that farmers have always been free to choose their own practices and “curiosity is one of the drivers of innovation”.

He noted that much of the information about regen ag comes from overseas. “There is a real opportunity for our science and research community to work with farmers to build a robust, evidencebased understanding of the benefits of regenerative agriculture practices in a New Zealand context.”

Well, yes. But the Government also has to take the lead. Regen ag proponents report getting the banks to listen. And farming has some powerful and very wary vested interests, including the fertiliser companies and big corporate farms with massive investments in new irrigation.

The Budget in May allocated just $34 million to the wider field of agricultural emissions research. More is needed. Greenpeace has proposed a $1 billion transition fund — that could easily come from the Government’s $20b rebuild fund.

Beyond the money, though, the key to progress is not to change agriculture one farmer at a time. It takes whole communities. Fed Farmers and others could play an exciting role in this.

There’s already strong evidence regenerative agriculture is a viable option for New Zealand. We need to know because if it is, it’s hard to think of an initiative more in tune with the task of building greater prosperity in a better world. A model for how to integrate economic, environmental and social goals, with greater resilience for the uncertain times ahead. And, as a terrific bonus, with the potential to narrow the town and country cultural divide.

Jono Frew, regen ag farm consultant: “It’s more profitable, more resilient and you have a whole lot more fun in doing this.” Also, that billion-dollar fund would help.

Value to NZ: Probably immense. Likelihood of major progress in next five years: Low.

2 A green-powered tech megacentre

Microsoft is coming. Avatar is already here. How do we make the most of this? Tech companies, along with companies that take a high-tech approach to their work, have been interested in New Zealand for a long time. Often, at our expense. They don’t pay enough tax, they demand financial incentives and special employment laws, they strip resources from local industry. But does it have to be like that? We’re New Zealand. That means something different now. We’re the country that beat the virus. Most of our energy comes from renewables. Most of our workforce is well educated and readily trainable. And did you hear? We Beat The Virus. Who wouldn’t want to do business from here?

Corporate interest in being based in New Zealand is only going to grow. So maybe it’s time to set some new rules. Hire local and use local suppliers. Invest locally. Obviously, we’ll need an equitable tax regime. If we can set good new rules for techrelated companies, the rewards could be immense. Health, agriculture, screen industries, education, the media and more, all stand to benefit from a supercharged tech sector. Importantly, every small and medium-sized enterprise (SME) in the country does too.

Microsoft will build a new data centre in Auckland: that’s Cloud-based computing services, based here. Kris Faafoi, the Minister for Government Digital Services, says this means “the Government, and New Zealand businesses and people, will be able to access the scale and security of Cloud services offered by a major global provider in ways we haven’t been able to before”.

ARE WE going to make the most of this? The dream is for every retailer, every tradie, every manufacturer and service provider, every authorised person working for any of them, to have immediate access to the data they need.

It might be supply chain activity in real-time, financial records and calculations, work schedules, risk analysis, customer profiles, you name it. All without SMEs having to buy and run expensive servers and the security systems to look after them.

Business commentator Rod Oram calls the productivity benefits that would follow “the number one global business lesson from the Covid crisis so far”.

Craig Hudson, chief executive at Xero, agrees. He’s pointed out that New Zealand’s GDP per capita is about 30 per cent below the average of the top half of the OECD, and it’s been stuck like that for 25 years. Cloud-based computing services for SMEs, he says, offer the best chance we have to increase productivity and will be essential to rebuilding the economy.

Xero commissioned a report on cloud-based computing from NZIER, just before the pandemic hit us. In its modelling, a 20 per cent increased take-up raised GDP by 1.2 to 2.1 per cent, with household spending up by $2.6 to $4.6b a year, business output by $4.1 to $7.3b, real wages by $1.8 to $1.9b and exports up too.

There are issues to resolve: Hudson lists skills gaps, concerns over privacy, internet infrastructure and cost. But they’re resolvable. Singapore’s on to it, with a Digital Economy Framework that includes services and grants paid directly to SMEs.

Now that Microsoft is coming, what about the other big tech companies?

We’d want them on our terms, of course, and those terms can go a lot further than tax and local contracts. Microsoft will need power for its servers and, as Faafoi has noted, the company has carbon-neutral commitments that fit very well with what he calls our “reliable, almost entirely renewable power supply”.

In fact, it’s not almost entirely renewable: 15 per cent of electricity is not generated from renewables, and progress with wind and solar remains slow even as demand for electricity instead of fossil fuels is rising. We’re going to need a lot more renewable energy very soon (see transport, below).

HOW DO we jump-start that? Sir Stephen Tindall says the answer is to invite corporates to set up the Southern Hemisphere’s leading tech centre, for communications, service industries and manufacturing. As part of the deal, we get them to help build a new generation of geothermal, hydro, wind and solar energy capacity to power their massive server farms. Hundreds of millions of dollars of

new infrastructure and thousands of jobs.

“I’ve been looking at this through two overlapping lenses: investing in the infrastructure that will catapult us into 21st-century ways of working and see us thrive at the same time; and decarbonising the economy to help us meet our commitments under the Paris Agreement.”

Valuable in its own terms, he says, and also to “position our country as the leading provider of green data centres to the Asia-Pacific region, much like Scandinavia has done for Europe”.

It’s our competitive advantage, because the competitors, in Australia and Asia, tend to rely on dirty old coal.

Michael Lee, an associate professor at the University of Auckland Business School, has applied a similar idea to the screen industry. He wants us to invite large screen companies here and encourage them to create a massive research fund. Matched dollar for dollar by the Government, it would enable New Zealand “to lead the world in tidal energy and aquatic-based biofuels, as well as information and digital technology”.

There’s another element to be fitted in. If we do this, how about we ask them to pay a levy to support the local film industry? We’ve got a local culture to nourish while we do all this.

Is this a real prospect for New Zealand? Climate Change Minister James Shaw wants New Zealand to sign up to a Sustainable Recovery Alliance. You’d think we should be leading it, really.

But no. There was very little in the May Budget earmarked for climate change. As for doing business in the Cloud, only $10m was allocated to e-commerce and another $12.5m for transtasman e-invoicing.

Meanwhile, Germany and France have proposed a €500b fund for Europe, with an explicit focus on digital and green options. Germany has dedicated 40 per cent of its own fund to that purpose.

“We need to think bigger,” says Xero’s Hudson. Perhaps we will. With this one, if we get the regulations right, it’s hard to think why any major vested interests would stand in the way.

Ports of Auckland has bought the world’s first full-size e-tugboat. They’re asking for help naming it, and yes, they’ve probably already heard about Boaty McBoatface.

Some waste disposal companies use electric trucks; some freight companies also use e-trucks, especially for short-haul work. But despite our renewable energy advantage, New Zealand has not yet seriously embraced e-transport. A proposal to have electric ferries in action in time for the America’s Cup, as a showcase, has gone nowhere.

Fraser Whineray, formerly at Mercury Energy and now Fonterra’s chief operating officer, says this has to change. He calls transport electrification our “biggest green growth opportunity”. Fonterra uses e-trucks for some of its short-haul work.

New Zealand is nowhere near being able to meet its greenhouse gas (GHG) emissions targets, including a 30 per cent reduction on 2005 levels by 2030. At the current rate, not counting the pandemic period, we could be producing 15 million tonnes more emissions per year than we should.

We’re heading in the wrong direction. Mainly in our cars and trucks. Transport, with 20 per cent of all our emissions, is the biggest GHG problem confronting our cities.

Electrification is a wide field: personal EVs (electric vehicles), mass transit (light rail and buses), heavy rail for freight and commuters, e-trucks, e-bikes and e-scooters. Those electric tugs, ferries and other boats; and aeroplanes too, for domestic routes at least.

Naturally, all of them have to be powered by renewable energy, from diverse sources.

There’s been some official progress. January’s $6.8b infrastructure announcement included electrification of the remaining 19km of Auckland’s rail network, from Papakura to Pukekohe. A third track on part of the Southern Line will make the network more efficient for freight and commuters, and there will be two new stations in fast-growing Drury.

But that’s about it. Strangely, there was nothing for Paerata Rise, down the line from Drury, where 4500 homes will be built. That’s more than in any other new residential development in Auckland.

As local board chairman Andy Baker has asked, how is it acceptable to build big new subdivisions in greenfields Auckland, very near the rail line, and not put in a stop?

Worse, the bulk of the January announcement, $5.3b, went to new roads that undermine the very idea of a carbon-reduction strategy. It was a colossal walk-back on the Government’s previously stated intentions.

Rail received another $1.2b in the May Budget, but $400m of that was for new Interislander ferries, with no mention of whether they’d be electric or perhaps hydrogen-powered.

Rail improvements are under way in Northland, Waikato and the Bay of Plenty, but little of it is tied to electrification.

It’s not the front-and-centre goal.

BACK ON the roads, the record is dreary. No end date for importing vehicles that burn fossil fuels, despite the Productivity Commission saying all new vehicles should be electric by 2030.

No “feebate” to levy high-emitting vehicles and subsidise the purchase of low emitters. That scheme was abandoned in February, with both National and NZ First gleefully claiming the credit.

High-emitting double-cab utes, the most popular class of new vehicle in the country, are exempt from fringe benefits tax. That’s right, we’re encouraged to buy them. Electric vehicles are not exempt.

The Government does exempt EVs from road user charges and has allocated $6m a year for charging stations. But it hardly compensates for the rest.

Even the plan to make government vehicles emissions-free by 2025 has been dropped, despite Labour having persuaded NZ First to sign up to it in their coalition agreement.

Auckland Council has followed suit, halting plans to buy e-buses for general use — although a new fleet of e-buses will operate the Airport Link to Manukau from mid-2021.

Many councils introduced wider footpaths and cycle lanes during levels 3 and 2 of the Covid crisis. Now they’re disappearing, casualties of a failure to commit to any larger purpose for new road configurations. It’s as if those councils haven’t even heard of the climate crisis.

As for e-bikes, they hold the key for a great many people wanting to leave the car at home for short trips. Maybe your commute, or incidental shopping, or meeting up with the kids on their own bikes. But they’re too expensive. Where’s the subsidy?

Meanwhile, where’s Auckland’s rapid transit network? “Light rail” has the potential to be the biggest single game-changer for reducing transport emissions — as well as road congestion — especially if it becomes a network that includes the North Shore. A new harbour crossing, perhaps a tunnel, dedicated to mass transit, is easily the best option for helping Shore commuters meet emissions and congestion goals.

There is some good news: rapid busway work is proceeding in Auckland’s east and south. But the first light-rail line, from downtown to Mangere, has been held up at ministerial level since before the lockdown. In early May, Transport Minister Phil Twyford said it was “on pause at the moment”; by late May he was forlornly promising “spades in the ground soon”.

NZ First leader Winston Peters said: “It is not going to happen in the immediate term.”

And there’s the problem. NZ First doesn’t support light rail.

HOW BIG is that battle inside the coalition? It’s even derailed the infrastructure rebuild plans, which were supposed to be a quick way to create jobs.

The Government set aside $3b for “shovel ready” infrastructure projects, probably with more to come. A high-powered reference group received 1924 project submissions from all around the country, totalling $136b in value.

Tough to cull. But Mark Binns, chairman of the reference group with the job of doing it, said in early April, “We will have projects available for the Government to consider early in May.” NZ First’s Shane Jones, the Infrastructure Minister, said in midMay that ministerial decisions would be made “soon”.

Sources say those decisions are not expected before the end of July.

Why? One clue is in comments Binns made in mid-April.

“If a region like Northland is about 3.6 per cent of the population,” he told an industry webinar, “we’ll look at having around about 3 or 3.6 per cent of the pie in terms of projects available. But then we’re going to provide a lens over the top of that in terms of what the Government’s objectives are socially and what other objectives they have around clean energy, etc.”

Two red flags for NZ First, right there. Jones has said many times this whole exercise will not have green goals. Binns believed it would. For some reason, he also thought NZ First would accept Northland getting a mere 3.6 per cent of the money.

The biggest casualty of the politicking is the report of the Upper North Island Supply Chain strategy group (UNISC). It proposed 80 per cent of freight haulage be transitioned to rail, with a new inland port at Kumeu¯, while Auckland port’s car imports and container operations be moved to Northport and Tauranga. Most of that is not shovel ready, but some of it is.

UNISC didn’t argue for full electrification now but assumed it would happen at some point. If it does, that project would become the cornerstone of a farsighted, superefficient, low-carbon freight strategy. As important in industry and commerce as mass rapid transit will be to commuting. But will either happen?

Value to NZ: Very high. Likelihood of major progress in next five years: Low.

BUT WAIT!

The way many public service and private sector leaders talk, you’d think we were already doing a lot of this.

At a webinar this week hosted by the high-powered Aotearoa Circle, some of those leaders talked inspirationally about “natural capital”, the economy being “a subset of the environment” and the opportunities of transitional planning. But the words aren’t yet turning into nearly enough action.

The optimist in all this is Climate Change Minister and Green Party coleader James Shaw. His revised Emissions Trading Scheme is close to becoming law: a stronger market for trading in emissions credits, finally about to play a useful role in reducing those emissions.

But the market won’t do it all. Much still rides on the Government’s billions, still to be announced.

Shaw: “One of the things I think a lot of people have missed about the structure of the economic recovery is there are three phases, right?”

The first was to help businesses and employees cope with the lockdown. The second is recovery, with short-term work programmes.

And the third is the rebuild. The investment to come.

How much imagination and courage are we going to see in those announcements?