The Restaurant Association of New Zealand (the Restaurant Association) welcomes the opportunity to make a submission on He Pou a Rangi – the Climate Change Commission’s 2021 Draft Advice. We are available to provide more detail and meet to discuss the matters raised in this submission, if required.
Our submission has been compiled following nationwide surveying of our Association Members from Monday, 1 March through Friday, 5 March 2021.
The Restaurant Association supports the calls of He Pou a Rangi – the Climate Change Commission to create a thriving, climate resilient, low emissions Aotearoa.
In particular, we support the Commissioner’s sentiment that all of us have a part to play and a contribution to make. However, we strongly oppose the recommendation to ban new gas or LPG connections by 2025 and “earlier if possible”, and we are disappointed by the seeming lack of consideration to the effects that this change will have on the landscape of the entire hospitality sector.
In line with this, our submission deals only with the specific proposal around “No new gas heating systems installed after 2025” and the proposal to “Start phase out of gas in buildings” as outlined below in Table 3.1: Key transitions along our path.
We support the net zero emissions target and understand that measures need to be in place to New Zealand achieving this, however, this proposed change will come at a major cost—both financially and operationally—to hospitality businesses, with very little reduction in emissions. The increase in financial and operational costs will then be passed down to consumers to help ‘cover the bill’, in effect, increasing costs for all.
CHANGING THE HEART OF HOSPO
It is not hyperbole to say there are a mammoth number of small businesses that currently rely on natural gas in their day-to-day operations, with gas being vital to their core service. For example, restaurants, cafés and bars often use natural gas for cooking due to its “fast cooking, efficiency, consistency” and because it gives “much better control when cooking,” emphasised by many of our Members in surveying conducted for this submission.
The proposed ban would see these businesses forced to move away from natural gas, to the detriment of their business and for many of them, their livelihoods. This ban would dampen the flame of numerous hospitality businesses, at a time where our sector is already bearing the brunt of repeated lockdowns and a steady increase in operational costs following minimum wage increases and rising food costs.
Not only does the draft advice have concerning implications for established businesses, but it also creates a higher barrier to entry for new hospitality outlets. By being forced to adopt a more expensive and less operationally efficient heating source, new entrants will automatically be put at an economic disadvantage.
This is something our Members were adamant they did not want to see happen, with more than 80% of our Members saying they did not agree that new entrants to hospitality should be barred from using gas from 2025.
COMPREHENSIVE, APPROPRIATE CONSULTATION
To see a recommendation of this magnitude being made without a cost-benefit analysis and untargeted consultation, shows blatant disregard for good public policy making: we would go as far to say it undermines the confidence in the Commission to look beyond their remit and apply appropriate weighting to a larger spectrum of issues.
Due regard should be given to consumer choice and individual business freedoms in all policy creation, and we consider that under the direction of a carbon price, businesses should still have the ability to choose the heat source that best serves their needs. The degree to which businesses are able to respond, pivot their operations and innovate will depend on a range of factors, including access to capital, extent of information provided, their skills and capability, and how well the transition is signalled and planned for.
We acknowledge that in signalling the required changes early, the Government provides small businesses more time to respond, and can help reduce the ramifications. However the majority of our Members indicated they were unaware that this proposal was even being considered.
In our view it is disingenuous to consider this manner of consultation is appropriate for a proposal of this magnitude, for a sector predominately made up by owner-operators. Many sectors, hospitality in particular, are just trying to keep their businesses afloat in the difficult economic conditions created by COVID-19. The pandemic means they simply do not have the financial means to upheave systems.
These proposed changes also significantly disadvantage future hospitality operators, many of whom are likely to be working in the sector currently and see operating their own premise as a long term goal. The blanket nature of this policy robs them of this chance.
Comments from Members included:
- “Changing to gas would be impossible for us as there is no other alternative for coffee roasters. All roasters run off bottled or mains gas.”
- “It would cost us approximately $80,000 to completely refit our kitchen with replacement ovens, deep fryers, grills, hot plates and replacing a 2 year old $18,000 instant gas hot-water cylinder. Clearly money we do not have post Covid19.”
- “Will they provide financial assistance if they force a change. Why are they even bringing this to us while we are on our knees with Covid?”
- “Seems to me that the Govt is hell bent on bringing hospitality to its knees.”
- “This is an unfair, unrealistic target… We will still be trying to pay our covid loans off by 2025 let alone refinancing to buy entire new kitchens.”
- “Is natural gas in commercial kitchens REALLY the right climate change priority?”
- “I support the idea of greenhouse gas reduction but not sure how much emissions from lpg contribute. Power supply companies would really have to be kept in check if there is no alternative.”
- “I can appreciate the principle of reducing emissions but it is a soft target that most likely accounts for a very small percentage of emissions. Every bit counts and if starting from scratch, fitting out to be fully electric may be a good idea. Induction cooktops are not as robust as gas and that could be an issue. Many items within the kitchen are for use with gas so the added costs of pots and pans etc is a factor.”
Although early signalling could help abate the effects, we do not consider that merely “signalling” is sufficient for something that will absolutely affect not only the bottom line, but the way in which operators in our sector conduct their businesses. More than signalling is needed.
We propose the following to He Pou a Rangi – the Climate Change Commission:
- Remove the proposed ban on natural gas for business-use, due to the implications outlined in this submission;
- Make a more concerted effort to engage meaningfully with the hospitality sector on the scope and nature of your proposals.
NOTABLE SURVEY SENTIMENTS
We asked our Members “Do you currently use gas in your commercial kitchen?”
- Yes: 93.86%
- No: 6.14%
We asked our Members “Would it be realistic for your kitchen to operate using electric induction cooking?”
- Yes: 28.57%
- No: 71.43%
We asked our Members “How difficult would it be to refit your business to use a different energy source?”
- “Extremely. It would cost over $10,000 to refit, and purchase new equipment would be another $10k+”
- “It wouldn’t be possible to refit our business, we will need to close our 44 year old establishment as our Chinese food menu is our bread and butter.”
We asked our Members “Is there anything else you would like to say about the proposed ban on new natural gas and LPG connections for homes and businesses from 2025?”
- “The proposed ban from 2025 is ridiculous. It is a safe, efficient form of NZ fuel that a huge number of people and businesses are using.”
- The big difference in ability to cook a la carte in a timely, skilled way is not worth the small gain…There are other, more significant factors to consider in methane production.”
- “There is no point banning gas if there are not affordable alternatives in place.”
- “Our industry will not survive if every shop needs to convert, unless there is money made available to pay for the upgrades.”
ABOUT THE SUBMITTER
Marisa Bidois (Ngāti Ranginui) is the Chief Executive of the Restaurant Association of New Zealand, the representative body for more than 2500 hospitality businesses.
ABOUT THE ORGANISATION
The mission of the Restaurant Association of New Zealand is to be the link between good food and good business so that our Member’s restaurant or café can succeed. We’re passionate about our vibrant industry, which is full of interesting, talented and entrepreneurial people.
Since 1972, the Association has worked to offer advice, help and assistance in every facet of the vibrant and diverse hospitality industry. Our Members cover the length and breadth of the country: we are organised into 13 regional branches and led by a national office located in Mt Eden, Auckland.
(09) 638 8403
Restaurant Association of New Zealand
45 Normanby Rd, Mt Eden