What reports has he received on the likely economic impact of the emissions trading system?
I have recently received and released an independent report on the emissions trading scheme, prepared by the economic consultancy firm Infometrics. The report concludes that the macroeconomic impact of New Zealand’s complying with our international commitments around greenhouse gas emission reductions, as represented by a variety of indicators, is very small. This is consistent with previous reports indicating that the impact on the size of the New Zealand economy under the Kyoto Protocol over the first 5 years would be negligible.
Yes. The report also confirms this. Infometrics estimates that significant reductions in emissions will occur in New Zealand under an emissions trading regime. It estimates that during the first commitment period the emissions deficit would decrease from around 9 million tonnes per annum to about 6 million tonnes per annum. That figure—as was expressly stated in the report—is before taking into account avoided deforestation and cost-effective agricultural mitigation opportunities. The report also assessed the cost of reducing emissions through an emissions trading system, compared with the Government just going out and buying emission reductions offshore, and found that it was cheaper to do it through an emissions trading scheme. It also confirms our view that under a Labour-led Government the economy will continue to grow.
Noting that the emissions trading scheme will ultimately result in increased power prices—and there is already a lot of concern in society over the levels of current prices—can the Minister advise how far work has proceeded on the compensation package that has been proposed to assist low-paid people on fixed incomes?
We have said there will be two components to that package, an important part of which will actually be helping people to reduce their electricity consumption, rather than just paying them to consume the same amount at higher prices. We have said previously that our decisions on this package will be finalised before the emissions trading legislation is finalised.