Shaw JamesHon JAMES SHAW (Co-Leader—Green): Thank you Mr Assistant Speaker for this opportunity to speak in the debate on He Puna Hao Pātiki the 2018 Investment Statement: Investing for Wellbeing. And I just wanted to start by picking up on some of the points made by the previous speaker Mr Andrew Bayly who was talking about how in corporate New Zealand—in fact right around the world now—intangibles are being valued and reported on in corporate reporting. The fact is that in this Investment Statement that is an area that is pretty thin but I would say that is actually probably the best articulation of the need to finish the work on the Living Standards Framework because the point of the Living Standards Framework is for us to actually get a much more comprehensive and well-rounded view of the sources of value and what our assets actually are in this country.So I'd just like to acknowledge the work that Treasury have done getting us to this point. It has taken about four or five years of work on the Living Standards Framework to be able to get to the point where we're even able to say what we've said in this Investment Statement which is quite different from the previous Investment Statement of a few years ago and I'd like to assure Mr Bayly that the next Investment Statement will be at least as different again from this one as this one is from the last one because the Living Standards Framework and the underlying measures will be so much more developed than where they are today.So I kind of see this as an important milestone in progress but it is an incredibly complex area. I actually started my career in this domain at PricewaterhouseCoopers in the UK in the late 1990s when they were first starting to try and work out how to evaluate measure report and assure intangible—or should we say non-physical or financial—assets as part of the corporate reporting process and it has been an incredibly long road. Even here in New Zealand we are only now just starting to dip our toe in the water in terms of the New Zealand corporate space but that's after 20 years of development in this field internationally.So if you can take the work that you see in the private sector and then try to amplify it in both size and complexity to scale up to the level of a country you can imagine why it is quite a significant challenge to be able to come up with a comprehensive report that actually includes all of the things that Mr Bayly is referring to that covers all of our economic assets as well as our social and environmental assets as well.So I did just want to start by referring to how the Investment Statement has changed and how it is likely to change again in the future and it has to take account of the changes that are going on in society as well. It does that specifically referencing demographic changes in the coming decade climate change and the impact that that is going to have on our economy and technological change particularly in the domain of artificial intelligence workforce automation and so on and how those forces interacting with our economy are likely to affect our Investment Statement.As Mr Bayly said this report is pretty interesting not just for what it does show but actually for what it doesn't show and there is a reference that I'll just choose to focus my comments on in the domain of natural capital alongside the kind of economic financial and physical capital that we've got pretty well covered and the social and human capital domains which are still—they're kind of better covered in this report than they have been in the past but still there's a bit of progress.But it's actually in the domain of natural capital that we're pretty thin on the ground and there have been a few reports recently. There was the Our Land report that was released recently. There was the system of economic and environmental accounts that were released earlier this year as well. In all of these reports including in the investment report there have been significant gaps in our knowledge whole areas that we refer to but then don't provide data for because we actually just don't have data for them and we don't have good ways of measuring them or for gathering that data. But people ask: why would you have natural capital? What is natural capital? Why would you have it in the Government's budgetary cycle as part of the Investment Statement? So I'll just try and illustrate with a few stories that I think demonstrate the value of valuing nature and of natural capital.So first of all in Tolaga Bay at the moment there is significant damage that has been caused by flooding which is exacerbated by run-off from clear-fell forestry in the surrounding region. If you can imagine the clean-up costs from higher levels of river than there would have been otherwise and the cost of having to clean out the excess wood that has washed down into the valleys and down the river the cost of all of that implies there is economic value in permanent forestry on those hillsides because the cost of the clear-felling causing that increased flooding is a direct economic cost. Therefore the forest remaining on the hill is an economic asset and some people would refer to that as kind of ecosystem services. And it's a pretty kind of basic way of looking at it which is well what's the avoided cost of maintaining your natural environment—your natural asset base? But it would be one that I think would be evidently clear to the people of Tolaga Bay this week.Another one is in the domain of climate change—a topic true to my heart. For example we know that the cost of storm damage or repairing roads and rail and airport clean-ups from the increasingly frequent and severe storms that are coming as a result of climate change—over the last 10 years that clean-up cost has gone from $19 million to $90 million per year in 10 years. So it's quadrupled in size as an outgoing cost over the course of 10 years. Obviously there are factors that you can zero out like population increase and so on but actually the cost of those storms and damage as a result of climate change—that's just happening in the transport space.The third one and I guess this is also particularly pertinent right now—and particularly our farmers will have something to say about this—is of course in biodiversity and biosecurity. The damage to our ecosystems and the sensitivity that our ecosystems have has a direct economic cost. If you think about the impact of Kauri dieback if that continues on and we lose our most precious tree species—the impact that that has on our kind of cultural sense of who we are but also actually in terms of tourism. If you say that myrtle rust could take out pōhutukawa and mānuka then obviously again that starts to affect who we are and how international people think about us and mānuka honey and some of those products. And of course the big one is Mycoplasma bovis. The value of maintaining a healthy ecosystem has a direct economic value to us.So it is an area that needs a great deal more development. We know instinctively that our natural environment is of core economic benefit perhaps more so to New Zealand than to some other countries because of the nature of who we are as a country and our economy. That's why things like the system of economic and environmental accounts that was released why the Living Standards Framework why the Our Land report why Indicators Aotearoa—the set of comprehensive social and environmental indicators that Statistics New Zealand is working with alongside Treasury—are so important. I think that when we think about all of those things together in that domain of work actually that is the kind of the thing that we want to be able to see represented in the next investment report because you can imagine whether it's the Bonn markets internationally who looks at these reports to get a sense of how confident they are in our economy and how we're managing—that there is perhaps a great deal of risk that's sitting there unquantified and currently not on the books.So I really commend Treasury and the rest of the Public Service for their work in producing this. I'm very much looking forward to how it evolves in future years.