We’ve just been in I think long [indistinct] half hours worth of discussions as part of the first ever Australia‑New Zealand 2+2 climate and finance dialogue. And as Minister Bowen indicated when we were in the room, we think it’s a world first as well as being a first for Australia and New Zealand to have climate and finance ministers come together and have the discussion that we are and that we have.
In the spirit of the fact that this is new and exciting and not like other international fora, you’re just getting the joint statement that came out of the event just now. And so I appreciate you won’t have had a lot of time to work your way through it.
What we’re going to do is just have a couple of minutes each from us to sum up how we feel about the discussions that we have had today and then after we do that we’ll open up for any questions that you might have for us.
From my perspective, as I say, I really welcome this dialogue. I think it’s reflective of the way in which both Australia and New Zealand view future economic development. We have to be doing that through a climate lens. We recognise that the future of our planet relies on us taking action on climate change, but equally the future of our respective economies relies on making sure that we have economies that understand the impact we have on the climate and what we can do both to litigate that but also adapt to it.
I also want to acknowledge at the outset that we in this year are celebrating the 40th anniversary of CER – that is, as is often said, the world’s best free trade agreement and something that’s helped guide our very close relationship to us. And we want to acknowledge that 40‑year history and thinking forward to the next 40 years acknowledge the importance of climate change as being central to the relationship as we move forward.
I’m going to offer the opportunity now for Jim to say a few words and then we’ll work our way down the line. So, Jim, welcome, again, to New Zealand. It’s great to see you here. Wellington has put on a very typical calm, still day for you, which I know you’ll appreciate.
I do appreciate it, Grant, thank you. Kia ora, everybody, and thank you, Grant, for your characteristically kind and warm welcome here to Wellington. And James as well, thank you for the opportunity to engage with you on really one of the most important, most defining issues that we confront together.
As Grant acknowledged from the outset, you know, we’ve got this remarkably successful relationship represented by CER, and the future of this relationship will be increasingly defined by what we can achieve together when it comes to climate change and the net zero transformation.
There are vast industrial and economic opportunities for our countries individually and together when it comes to getting this transformation right. We recognise that and our New Zealand friends recognise that as well. And that’s really important. This is going to be a defining decade for both of our countries and our ability to succeed in the defining decade will be determined arguably most of all by our ability to manage this energy transformation in particular and to deal with climate change in our economies and in our communities as well.
Climate change, as we all know, is full of risk, but the net zero transformation is full of opportunity for both of us. Now, if there’s one thing that characterises the Albanese government it’s our willingness to engage, collaborate, cooperate, have dialogue, particularly with friends as close as our New Zealand friends are, and that’s what really motivates and inspires this 2+2 that we had today, an incredibly successful meeting between us, helped along that we are all friends of longstanding. But we’ve been able to make some substantial progress today on behalf of both of our countries on one of the most important issues that we confront together. I appreciate and thank Grant and James in particular, and thank Chris Bowen for his involvement as well, and I throw to him now.
Thanks very much, Jim and Grant. Well, obviously, climate change is the biggest challenge and the biggest opportunity for both our countries, and we want to tackle those challenges and opportunities as one. And that’s what we’ve been discussing today. Today has been important, as Grant mentioned – it is the world’s first 2+2 climate and finance meeting, and I can’t think of two countries more appropriate to do it than Australia and New Zealand.
But in terms of dealing with the challenges, many of the challenges that we face are similar. We’re at the same end of global supply chains. We’re dealing with similar issues. We are dealing with massive impacts on our countries through natural disasters and slower burn health impacts of climate change. And any challenge we are facing is better faced in full collaboration and cooperation.
So today we’ve agreed to work together, just to take a couple of examples: on electric vehicle supply chains. Ensuring that Australia and New Zealand are collaborating and working together maximises our opportunities in relation to electric vehicles and the journeys we’re are both on. In Australia we are developing fuel efficiency standards. New Zealand has already done it. There’s government procurement programs that can best be worked in collaboration. A guarantee of origin scheme so that our exporters are best able to show the world that our products are truly net zero or on the pathway to becoming so and low emissions. All these are things that are better tackled together.
So this is important because I know that Grant and Jim already had a first class working relationship. Certainly James and I do. But doing it together, tackling climate change in the way that we all see it – as a massive economic opportunity for our countries; the world’s climate emergency is Australia and New Zealand’s jobs opportunity – it’s something that we’ll tackle together. Also James and I always – have always collaborated on international engagement and continue to do that. We talked about it today in the lead‑up to the important COP and the global stocktake that’s coming later in the year. There is no closer collaborator for Australia than New Zealand. There’s no closer friend for me internationally than James. I know Jim would say the same. It’s been a delight today to formalise that relationship with the document we’re about to sign and, more importantly, the work that we’ll do together.
So what is really significant about this is it’s not just two climate ministers or two finance ministers; we’re actually bringing our financial systems and our climate systems together. And I don’t think it’s a huge stretch – most people will understand the obvious relationships between the two. You know, New Zealanders in the room will be very familiar with the economic impact of the recent cyclone and flooding events in Auckland and what options that limits us for in terms of other things that we have to do. You know, people here are aware of the journey that we’re on in terms of, you know, as Chris said, trying to electrify our vehicle fleet or to build huge amounts of renewable electricity generation and transmission both onshore and offshore and so on and so the extent to which we can apply our supply chain and our financial systems is really significant.
And so some of the things that we have been talking about in relation to the supply chains, some of them have been in relation to some of the work that we’re both doing on both sides of the Tasman around things like having common taxonomies for our financial systems to understand what kind of climate finance or green finance looks like. On moves around moving to reporting of climate‑related risks and the implications that that has on the financial system and so on, and the ability to align capital flows with the kind of transition to a low carbon economy. Green bonds, sovereign green bonds and so on that, again, both sides of the Tasman with working on. And, again, you can see given our relationship – certainly the CER relationship over the 40 years but certainly over the last couple of hundred years the alignment of our economies and the extent to which we can make our systems kind of sing from the same song sheet the better that is for all of us and I think by extension the rest of the world as well.
And I do want to reference I think this is the first time that our governments have been as aligned on these matters as they are now for a very, very long time. And it was very apparent to Chris and I in Sharm El‑Sheikh last year how that alignment shifted things in the rooms that we were in. And then we looked around at some of the other countries that we often associate closely with, such as Canada, Japan, the United States, Europe and so on and actually right now there is a moment where all of those governments are highly aligned and really wanting to push hard on this. And so this feels like a very natural step for us to take.
Thanks, gentlemen. That’s a really helpful summary of where we’ve got to. I’ll just add one thing before we open up for questions, and on the subject of questions, I’ll be listening carefully for accents to ensure that we cover off people from both sides of the Tasman. Some have lived on both sides, I know, and I’ll watch out for what accent you use.
But before we come to that I do want to just mention one additional thing which has briefly been mentioned as we discussed this. We did have important discussions about our collective role in the Pacific. We have a very important relationship with our Pacific neighbours. It has been a priority for both our governments and we continue to believe that our role here is to support our Pacific neighbours and their ambitions. We do not purport in any way to speak for the Pacific. But we do have roles in international fora to advocate for the Pacific. It is quite clear that the existential threat of climate change is most real in our region for those countries and we discussed today the importance of continuing that in all of the multilevel fora that we are involved in and in making sure that the eyes and resources of the world are focused on where climate change is having its greatest impact, and that does include in the Pacific region. And so we’ve recommitted ourselves today as ministers to doing that work in whatever fora that we’re in.
Grant, do you want to do the (inaudible) now?
Well, I was saving it for the end to be honest, James. But, you know, look, I do note that no expense has been spared on the pen. Let’s have a few questions and then we’ll finish with signings.
Ministers, one of the things that just caught my eye here was the exploring the potential for collaboration on vehicle manufacturing. Just wondering both on the Australian and New Zealand side is there a prospect that this will breathe some life back into the vehicle manufacturing sector?
Happy to have the first go at that. I’m forward leaning about the opportunities certainly for Australia in manufacturing in the renewable supply chain, including electric vehicles. Whether it’s full electric vehicles or one particular type of electric vehicle like last‑mile delivery vans. There’s a lot of interest in manufacturing in Australia. The chairwoman of Tesla is an Australian, which we’re very proud of. And, as you know, the economics of manufacturing in the renewable supply chain are different to the old economics. And that’s why when we talk about being a renewable energy superpower in the Australian context we include manufacturing. Our National Construction Fund has up to $3 million set aside for co‑investment in manufacturing related to renewables.
So we’re very forward leaning on this. Electric vehicles or components of electric vehicles, factories considering we are home to nine out of the ten critical minerals necessary for a battery. We want to add more value, do more processing, more manufacturing. Solar panels, we have one solar panel manufacturer in Australia. We can do better than that.
So we believe there’s great opportunities. But this is not just about domestic manufacturing; we both drive on the right side of the road – the correct side of the road.
If you’re driving on the right you’ve got a bigger problem!
I meant correct, and then I realised [indistinct], so it could be misinterpreted. But that means we are not, you know, the same as other key markets and key markets where cars are manufactured, so we need to speak with one voice to those manufacturers. I think our international collaboration, you know, focuses more on that, but we are very forward leaning on opportunities for Australia and certainly where there’s opportunities with Australia we’re keen to collaborate with you.
Yeah, Luke, I think the access to supply chains is one of the things that can really stop us from making the transition. And as countries around the world gear up to electrify their vehicle fleets in smaller markets like ours we are at the very far end of global supply chains and are at great risk of missing out. And, you know, if you add our market to the Australian market, that’s an expansion of around a fifth in terms of that purchasing power. If manufacturing does move closer to us both, however that happens, then that can only be a good thing in terms of both of our countries’ transition.
You sort of pitched this as an opportunity for New Zealand and Australia to collaborate. But in other ways New Zealand and Australia are competitors, for example, the gaming subsidy in Australia has forced New Zealand to set up its own subsidy to match that. And the same could apply to cars that drive on the road – the left hand side of the road. How do we balance basically – you know, you say we work together to get the right sort of cars. Are we not competing to get those limited supply of cars? There’s a shortage of that type of car in New Zealand [indistinct].
In terms of the supply chain issues that’s the very point we’re trying to make – is that you do need to collaborate more in this part of the world to make sure that we’re seeing, in this case, electric vehicles find their way here. I think that’s the point we’re trying to get over.
In terms of your wider point, of course, you know, we’re two separate countries. Were we to announce something about that today that would be a big story, but we’re not. We are two separate countries, and so, therefore, there will be occasions and times on which we are competing in different areas. Certainly the companies that are within our countries will be doing that from time to time. We’re not trying to stop that; we’re simply saying that at a government‑to‑government level there’s a lot more we can do to support one another to get into genuine, sustainable economic development.
There is an awful lot of common investment across our jurisdictions. You know, our banking system here in New Zealand, you know, owes a tremendous amount to Australia. So there is already a lot of competition and cooperation, but this is about setting a framework by which we can do the best by our people and our companies to be able to do that.
I’ll let Jim have a go, and then you can come back.
Very briefly, I mean, it’s more common that we cooperate than compete. And that’s because we see each other as force multipliers when it comes to this big, economic transformation that we both want to see in our economies. And from my point of view and the Australian Treasury point of view one of the best examples here is when it comes to how we finance this transformation. And there are some parts of the agenda where New Zealand is ahead of Australia and some parts of the agenda where the opposite is true, and we’ve got a lot to learn from each other. You know, we want to attract investment in the clean energy transformation. And one of the ways that we do that is we better inform our markets, we make it easier for investors, particularly big investors, to do the right thing – and that’s by making it easier with taxonomies and other agendas for people to make good, informed choices in markets. And that is to our mutual benefit, and that’s how we see it.
I guess the thrust of my question is: will this help us avoid getting into those competing subsidies, like we have in the gaming sector now, where we battling to subsidise things to sort of get one up on one another?
Yeah, look, I mean that’s not specifically covered in the conversation we had today, but the reality of be it the film sector or the game development sector globally these sorts of subsidy schemes exist. So it’s not like New Zealand and Australia are having a competitive grab at each other in that regard. It is the nature of those sectors. As you know, here in New Zealand in the budget most recently we got a rebate scheme in place for the gaming development sector. Arguably as with the film sector, we would have done that regardless of what our friends in Australia were doing. What this is about, as Jim has said, is making sure that we set the conditions by which we learn from one another and the conditions by which we’re able to grow together.
So obviously New Zealand has had a number of devastating environmental disasters recently. What can we learn from Australia about the next‑ building better, I suppose?
I think [indistinct] Australians to talk to us about that, but one thing we specifically discussed today and in fact we’ve already done is our approach to how we managed our response to the Auckland floods and Cyclone Gabriel was to bring a taskforce together to get the voices at the table of central government, local government, kiwi insurers, other parts of the private sector. That in many ways was based on models that we saw in Australia, in particular where the Queensland Reconstruction Authority came from. So we’re already learning those things from each other and continuing to do that.
What we committed to today is looking at the way we understand adaptation indicators, how we monitor our work in adaptation, how we are able to measure our success. And Minister Shaw made the comment in our discussions earlier on that we do a lot of that with emissions reduction but perhaps less so in adaptation in New Zealand. So we know we’ve both got a lot to learn from each other there but, Chris, do you want to add?
Yeah, totally. And that was a big part of our conversation – adaptation, what we’re doing, what we can collaborate on learn from each other. In Australia we’re developing a national risk assessment which will feed into the national adaptation plan. We shared notes on that. We shared notes not just on natural disasters, as important and devastating as they are and have been in both countries, but slower impact issues like heat waves. We’re adding a year of heat wave every five years in Australia. That has huge health implications. We’re developing a national health and climate change strategy in Australia. Again, we shared notes on that. These are things which each individual country will do, but we can learn from each other and there was a good change today on those issues and [indistinct] as well as a whole bunch of other issues, including moving our governments to net zero. Your commitment of 2025, ours is 2030. First Nations Indigenous engagement, again, we were very keen to learn about your engagement in New Zealand, and we have much more to do in Australia.
It sounds like this joint statement really only became possible with the change of government in Australia. Correct me if I’m wrong. But Ministers Robertson and Shaw, have you had any discussions with the Opposition to ensure that this agreement will continue if there is a change of government here?
Personally I haven’t but I know that some of the appointments that our Australian colleagues have while they’re here will help facilitate those sorts of discussions. It’s quite regular when I went to Australia previously before the change of government I would meet with both the Australian Government and Jim in that case. And that’s quite a regular part of Trans‑Tasman is that we try to keep dialogue going with both the Government and the Opposition. Because ultimately the relationship has to withstand any change of government that might occur. So that will be a continuing part of it.
I imagine both sides of the Tasman you’ll find that other political parties would want to continue this. What I would add though is that the Albanese government have shown a tremendous commitment to the relationship between Australia and New Zealand. We obviously saw that with the citizenship changes most recently. But actually in this work both as has already been indicated by other ministers, both in the climate and the finance areas we talk to each other regularly. We are constantly sharing ideas. When we’re in those international fora we’re working together. I do want to give credit to the Albanese government for the fact that in a very busy first 12 months they’ve offered a lot of time to New Zealand and to the issues that interest us. And we look forward to that continuing.
Probably a question for Jim Chalmers or Chris Bowen. Australia is still building new coal, oil and gas projects. New Zealand obviously has stopped its further exploration. Was there any discussion about a joint agreement on the phasing out of relying on fossil fuel extraction?
No, of course every country is going to tackle these issues in their own way, and from Australia’s point of view we have an ambitious target to increase our renewable energy to 82 per cent of our energy grid by 2030 – that’s 79 months away – from around 30 per cent now. That is an ambitious job we have.
In relation to our international‑facing position on both, we’ve made it very clear. We’ve been very honest with Australian communities that are coal and gas focused communities that the world is changing. Eighty per cent of our trading partners are committed to net zero, and our export mix will change. We want to empower Australia’s regions to make the most of those export opportunities as we become a renewable energy superpower. We’ve always been an energy export country. We will always be an energy export country. Increasingly that will be renewable energy. That is very much the focus of our government – to not say to the regions, “You’ll stop doing this and you’ll start doing that,” but saying that, “The world is changing and we're going to help you with this change." That is our focus entirely and will continue to be our focus. We’ll continue on that transition domestically and we’ll continue to help our communities manage the transition.
Just on that, or following on from that, Grant, you mentioned the problems of the Pacific. The Climate Change Minister from Vanuatu said yesterday that the Australian government is greenwashing by allowing new oil, gas and coal to be produced with offsets. What do [indistinct]?
Well, I’m happy to go first. I’ve had plenty of discussions with the minister. And, you know, we understand where each other is coming from I think. We have made Pacific engagement an absolute signature of our approach not only to foreign policy but our climate policy and across the board our government’s approach. But in relation to that, again, I will be very clear: this was a climate change – that comment was in relation to our recent budget. This was a climate change budget. We had $2 billion of investment in green hydrogen. We had a $1.6 billion program to help Australian businesses and households make the decisions they need to electrify. We created a net zero authority. These are three signature matters from Jim’s budget which are climate focused. So that is very much where we’re taking the conversation. We are making up for some lost time, I could say diplomatically, in Australia. But we are getting on with that task. And obviously we have strong engagements with the Pacific and, you know, listen to different views. But the idea that this budget wasn’t a pro‑climate budget is one that just is not the case when you consider the massive investment in Jim’s budget in climate and renewable energy.
We’ll just take a couple more and then we’ll deal with the much‑anticipated signing ceremony.
Just the past 15 years in both countries I guess the politics of climate have been at different times perceived as a trade off, I guess, between cost and [indistinct]. It appears that, you know, politics in both countries have moved on slightly from that. I’d be very interested in both Grant Robertson and Jim Chalmers your reflections on the fact that we’re currently in a high inflation environment. People are doing it tough. New Zealand looks like we’ve sort of peaked at, you know, 5.5 per cent OCR rate, which I’m sure [indistinct] probably Jim Chalmers. You guys are still on the way up from what the RBA is saying. Just how do you see the management of the politics of, I guess, the important [indistinct]?
Look, I think by the very nature of this gathering you can see that that kind of that one or the other approach is well and truly gone. You know, as responsible finance ministers or treasurers our job is not only to look at the here and now – which is hugely important to help people deal with, you know, cost of living pressures and bring inflation down – but undoubtedly to make sure that we’re preparing for future generations to be able to live sustainably. And so the two things are whichever metaphor you like, two sides of one coin or whatever it is. There is no differentiation. That’s the very reason why we’ve all come together.
Two other quick points related to that: the first is that the cost of inaction on families and households is far greater than anything that people are facing right now. You know, if we weren’t to do this, the impact on households, household budgets, the way people live their lives will be absolutely enormous. And so that action is actually part of the long‑term cost of living equation that we’ve got to put in front of us.
Obviously each of us will again, country by country, both take slightly different approaches but we are also at slightly different points in the economic cycle. That’s our job to manage that. You know because I’ve said it to you a million times this year this is going to be a challenging year for New Zealand in terms of global economy and in terms of what happens here in New Zealand. We believe we’re well placed to deal with that given the strong underlying fundamentals of the economy. But every single day – I’m sure Jim is the same – I wake up thinking about what it is that we can do to support New Zealanders through the here and now and make the difference in the long term. That’s the balancing act that long‑suffering finance ministers and treasurers have to deal with.
I think the economy versus environment trade‑off is a thing of the past, well and truly. And, you know, we’ve had in Australia some fits and starts when it comes to ambitious action on climate change. And the difference between the beginning of the 15‑year period that you referenced and where we find ourselves now is I think that there is broad understanding and recognition in both countries that doing something meaningful on climate change and getting the net zero transformation right is good for our economy. And, really, whenever we come to these kinds of thorny policy areas and policy challenges like this which we’ve been grappling with today and before that and we will after today is to try and take a people‑facing approach to it. And when you take a people‑facing approach to it, as we do in our broader economic policies – I know Grant does and I certainly do in our government – when you do that then you realise that this transformation is happening one way or another and our choice is actually whether we make our people beneficiaries or victims of that change, and not just that change but technological change, the way that our industrial composition is changing as well, the care economy and in other ways.
There are big shifts happening in the global economy and in both of our domestic economies. And our choice and our mission is to try and make that work for people, not against people. And once you cross that – once you make that decision and once you see thing through that people‑facing framework then some of these decisions, they still require political courage but they become a bit easier to make. And Chris mentioned before, I mean, so much of what we do in economic policy, in the budget more broadly and Chris’s leadership in this specific policy area is about making sure it works for people, not against people, particularly in communities which are particularly concerned about this transformation but more broadly as well. We’ve got a people‑facing approach to it. Yes, it requires political courage, but once you adopt that framework then there are obvious ways that we’ve talked about today and that we’ll work together on where we can make that – where we can make people beneficiaries, not victims.
That feels like a really nice – we’ll just do one more.
Sorry just for James Shaw. Treasury documents show that a third of the climate emergency response budgets are underspending. Is that concerning to you, and why?
I think it’s a concern to all of us. Although most of the reasons for that are similar to kind of everywhere else in the economy where we’re facing supply constraints, human resource constraints and so on rather than because people are sitting on their hands. I know our agencies are under a huge amount of pressure from the respective ministers who are responsible for those, and I know Grant and others are pushing very hard to make sure that we’re delivering the things that we need to deliver.