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Purpose of report
1.
The purpose of this report is to provide you with a draft Cabinet paper, in response to
Cabinet’s request in March 2016 for a report back on how a contestable fund could best be
utilised to help promote the uptake of low emission technologies. Cabinet also asked for
further advice on the costs of a proposed demonstration of electric vehicles (EVs) across
government fleets [CAB-16-MIN-0108.01 refers].
2.
It also provides advise on the feedback from the Treasury on the draft Cabinet paper.
Comment
3.
Officials at the Ministry of Transport, Ministry of Business, Innovation and Employment and
Energy Efficiency and Conservation Authority have worked closely to produce this new draft
Cabinet paper. We consider it addresses the key concerns raised by Treasury in their
departmental comments on the March paper. However, Treasury officials do not accept this
and will provide separate departmental comments and have asked for split
recommendations, though they have not provided these at this time.
The paper proposes that dedicated fund is only established for one year, while separate
work on re-purposing an existing levy is completed
4.
Among the key issues identified by the Treasury is a concern that the March 2016 paper did
not clearly demonstrate a need for the proposed fund, especially in the longer term. After
consultation with the Treasury, the paper now proposes that the fund be established for one
year using reserves already identified by Energy Efficiency and Conservation Authority.
5.
The Treasury also raised concerns over the lack of clarity around the administrative and
governance arrangements for the fund. They indicated they were especially concerned about
how the Government could be sure that any spending was high quality, and did not displace
other higher quality projects. The Treasury’s preferred solution is to use the first year of
operation of the dedicated fund as a way of resolving these practical issues. The information
collected would be important to establish the fund for the long term.
6.
Although we have sought to address Treasury’s concerns in the paper, Treasury does not
accept that sufficient work has been done to identify that the dedicated fund is required, or
that it will deliver quality spending. They will be providing departmental comments to this
effect on Friday for inclusion in the final paper.
The proposed paper on re-purposing an existing energy fund should accompany this paper
7.
We are aware that the approach of creating the fund for only one year creates a risk,
especially if the work on re-purposing an existing levy planned by Ministry of Business,
Innovation and Employment, which depends on amendments to primary legislation, is
delayed. To some extent these risks can be managed by investigating alternative funding
options at the same time, which include the options of a new bid for funding through the
Budget 2017/18 or a reprioritisation of Crown funding through the Energy Efficiency and
Conservation Authority.
8.
The paper notes that the ongoing funding was expected to come from a re-purposed levy in
the energy sector. We consider it would assist Cabinet’s ability to see how the two
proposals are linked if the papers were considered at the same time. We understand from
Ministry of Business, Innovation and Employment officials that the paper could be finalised
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relatively quickly, though it is unlikely it could be ready for consideration by EGI on 13 April
2016, as is planned for this paper.
9.
Again, although the paper has sought to address Treasury’s concerns, they do not accept
that it is appropriate to agree to the establishment of an ongoing fund after the first year, until
the parallel process being undertaken by the Ministry of Business, Innovation and
Employment on the re-purposing a levy, and determining the preferred funding option, has
been completed.
The proposed 24 vehicle trial will be funded directly from Energy Efficiency and
Conservation Authority’s reserves
10.
Cabinet also requested advice on the costs of the proposed trial of EVs in the government
fleet. The paper sets out the detailed costs in Annex 2 and the body of the paper notes that it
would be explicitly funded from the approximately $4 million of reserves available. This will
leave $3.5 million for other activities.
The administration of the fund will be reported back to you
11.
We are aware of your desire for the Ministry of Transport to have an active role in the
oversight of the dedicated fund and other activities to promote the uptake of EVs. The
Ministry fully expects to take a leadership role, along with the Ministry of Business,
Innovation and Employment. However, we expect the actual deployment of the fund will be
the role of the Energy Efficiency and Conservation Authority.
12.
The attached Cabinet paper also notes that the role of the leadership group established by
the March Cabinet paper in the operation of the dedicated fund has not been fully
determined. The paper proposes that it would include membership from Ministry of
Transport, Ministry of Business, Innovation and Employment and Energy Efficiency and
Conservation Authority. This will be subject of a further report back to you, as agreed by
Cabinet.
Recommendations
13.
The recommendations are that you:
(a)
note that the attached paper reports back to Cabinet on two matters on how
related to how a contestable fund could best be utilised to help promote the
uptake of low emission technologies that was requested in response to the
March 2016 Cabinet paper on electric vehicles [CAB-16-MIN-0108.01 refers]
(b)
note that the Treasury intend to make a Departmental comment and to insert
split recommendations, to the effect that they do not support the fund being
established at this time
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